Post Office Monthly Income Scheme (POMIS): Features & Benefits

The Post Office Monthly Income Scheme (POMIS) is a popular, government-backed savings scheme in India that offers monthly fixed income to investors. It is designed for individuals seeking a safe investment with steady monthly returns over a fixed tenure, especially retirees and conservative investors. Motilal Oswal presents a detailed guide on POMIS to help you understand its features and benefits for smarter financial planning.

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What is Post Office Monthly Income Scheme?

POMIS is a savings scheme offered by India Post where you deposit a lump sum amount and receive monthly interest payouts at a fixed rate. With a tenure of 5 years, it guarantees capital protection and stable income throughout the period. This scheme is managed by the Department of Posts, Ministry of Finance, ensuring government-backed security.

Features and Eligibility of Post Office Monthly Income Scheme (POMIS)

The Post Office Monthly Income Scheme (POMIS) is a safe and reliable investment option for individuals seeking steady monthly income with minimal risk. Below are the key features and eligibility criteria:

Key Features

• Lock-in Period: The scheme has a fixed tenure of 5 years. Funds cannot be withdrawn before maturity unless penalties are applied.

• Monthly Interest Payout: Interest is paid monthly and can be automatically credited to a savings account via ECS.

• Minimum Deposit: Rs. 1,000 is required to open an account, and additional deposits must be in multiples of Rs. 1,000.

• Maximum Investment Limit:

  • Single Account: Rs. 9,00,000
  • Joint Account: Rs. 15,00,000

• Account Types:

  • Single Account – for individual investors.
  • Joint Account – up to 3 adults with equal rights over the account.
  • Minor Account – for children above 10 years; funds can be withdrawn after the child turns 18.

• Transferability: Accounts can be transferred to another post office, making it convenient if you relocate.

• Premature Withdrawal: Allowed after the first year but comes with penalties depending on withdrawal timing.

• Taxation: Interest earned is exempt from TDS, but does not qualify for Section 80C tax benefits.

Eligibility Criteria

• Who Can Open: Only resident Indian citizens are eligible.
• Who Cannot Open: RIs are not eligible to invest in POMNIS.

This combination of government-backed safety, predictable monthly income, and flexible account options makes POMIS an attractive choice for retirees, conservative investors, and those looking for low-risk savings.

Documentation required

To open POMIS at a Post Office you generally need:

• Duly filled account opening form (available at post office).
• Identity proof: Aadhaar / PAN / Passport / Voter ID / Driving licence.
• Address proof (if separate): as above.
• PAN (mandatory for amounts above prescribed limits).
• Nomination (mandatory at account opening).
• Proof of source of funds if investment > ₹10 lakh (PMLA rules).
  (Submit originals for verification; photocopies will be taken by the post office.)

Current Interest Rates on Post Office Monthly Income Scheme

The Post Office Monthly Income Scheme's rate of interest is fixed by the Finance Ministry and the Central Government of India. The interest rates are often revised every quarter depending on the returns generated by government bonds of similar tenure.

From 01 January 2025, interest rates for Post Office Monthly Income Scheme will be 7.4% per annum, payable monthly.

The following table includes the current and previous interest rates:

Time Interval

POMIS Interest Rate (Per Annum)

From 1st January 2024

7.40%

1st October 2023 - 31st December 2023

7.40%

1st April 2023 - 30th June 2023

7.40%

1st January 2023 - 31st March 2023

7.10%

1st October 2022 - 31st December 2022

7.10%

1st April 2020 - 30th September 2020

6.60%

1st January 2020 - 31st March 2020

7.60%

1st October 2019 - 31st December 2019

7.60%

1st July 2019 - 30th September 2019

7.60%

1st January 2019 - 31st March 2019

7.70%

1st October 2018 - 31st December 2018

7.70%

1st January 2018 - 30th September 2018

7.30%

How to Open a Post Office Monthly Income Scheme (POMIS) Account

Opening a Post Office Monthly Income Scheme (POMIS) account, also called MIS, is simple and hassle-free. Before starting, ensure you have a Post Office Savings Account, as it is mandatory to receive monthly interest payments. If you don’t have one, you must open a savings account first.

Step-by-Step Account Opening Procedure

1. Collect the POMIS FormVisit your nearest post office and request the POMIS / MIS application form. The Postmaster can assist you if needed.

2. Prepare Required Documents
   Submit the completed form along with:

   • Photocopy of ID proof (Aadhaar, PAN, Passport, Voter ID, or Driving Licence)
   • Photocopy of Address proof (Aadhaar, Passport, or other valid documents)
   • Two passport-sized photographs

3. Submit Original Documents for VerificationThe post office will verify your original documents before processing the application.

4. Signatures of Witnesses or BeneficiariesSome accounts may require signatures of witnesses or nominees, especially for joint or minor accounts.

5. Deposit the Lump Sum Amount

   • Minimum: ₹1,000
   • Further deposits: multiples of ₹1,000
   • You can make the deposit via cash or cheque.

6. Receive Passbook / CertificateOnce processed, you will receive a passbook or account certificate. Your monthly interest will now be credited to your Post Office Savings Account or via ECS transfer.

Eligibility Criteria to Open POMIS Account

• Resident Indian
• Minimum age: 18 years for individual accounts
• A guardian can open for minors aged 10 to 18 years
• Joint accounts can be opened by up to 3 individuals

Early Withdrawal Penalty in POMIS

The Post Office Monthly Income Scheme (POMIS) is a 5-year fixed tenure scheme, and premature withdrawals are allowed only under specific conditions. Here’s how the early withdrawal penalties work:

• No withdrawal within the first yearYou cannot withdraw funds before completing 1 year from the date of deposit.
• Withdrawal between 1–3 yearsIf you withdraw after 1 year but before 3 years, a 2% penalty is deducted from the principal amount.
• Withdrawal between 3 years and maturityIf withdrawn after 3 years but before the 5-year maturity, a 1% penalty applies on the principal.
• After maturity (5 years)No penalty is applied once the account completes the 5-year tenure. You will receive the full principal along with the accrued interest.

This structure encourages investors to stay invested for the full term to maximize returns while still providing flexibility in case of urgent financial needs.

Benefits of Post Office Monthly Income Scheme (POMIS)

1. Guaranteed Income

The POMIS is government-backed, ensuring that both your principal and interest are completely secure. Returns are not linked to market fluctuations, making it a safe option for conservative investors. This stability makes it a perfect choice for retirees or anyone seeking steady, predictable cash flow every month. With POMIS, you can rely on your investment for consistent income without market risk.

2. Monthly Liquidity

One of the key advantages of POMIS is the monthly interest payout, which provides a reliable source of income. This regular flow helps investors plan household expenses, pay bills, or supplement a pension. By receiving interest every month, you can budget your finances efficiently. Monthly liquidity ensures that your savings continue to serve your needs without touching the principal.

3. Simple and Transparent

Managing a POMIS account is straightforward and easy, requiring minimal paperwork and a simple passbook system. Post offices are widely available in towns and villages, making this scheme accessible to most Indians. The process is transparent, with clear information about interest, maturity, and withdrawals. Its simplicity ensures that even first-time investors and senior citizens can invest with confidence.

4. Reasonable Return for Safety

The scheme currently offers an attractive interest rate of 7.4% per annum, declared by the government. Compared to other safe instruments like bank recurring deposits, POMIS offers competitive returns for the level of risk involved. It strikes a balance between reasonable income and capital safety. Investors can enjoy a steady return while knowing their principal is fully secure.

5. Transferable Accounts

POMIS accounts can be transferred from one post office to another, which is helpful if you relocate to a different city. The process is simple and does not affect your interest earnings, allowing continuous receipt of monthly payouts. This flexibility makes it suitable for working professionals and individuals who frequently move. You can keep your investment intact while managing your relocation effortlessly.

6. Tax Efficiency

Interest earned from POMIS is exempt from TDS deduction, ensuring that monthly payouts are received in full. While the scheme does not provide Section 80C tax benefits, it allows investors to plan their finances better without upfront tax deductions. This is particularly beneficial for retirees and conservative investors who depend on monthly interest for income.

7. Ideal for Low-Risk Investor

POMIS is an excellent option for investors who prioritize safety over high returns. It provides stable and predictable income without exposure to stock market volatility. Your money remains fully protected under government backing, giving peace of mind. This makes it highly suitable for retirees, senior citizens, and anyone seeking low-risk, consistent returns.

Post Office Monthly Income Scheme Vs Other Post Office Saving Schemes

Feature

POMIS

Recurring Deposit (RD)

Time Deposit (Fixed Deposit)

Public Provident Fund (PPF)

Tenure

5 years

5 years

1-5 years

15 years

Interest Rate (FY 2025-26)

7.40% p.a. (monthly)

6.7%-7.1% p.a. (quarterly)

6.9%-7.5% p.a. (quarterly)

7.1% p.a. (compounded yearly)

Income Payout

Monthly

Maturity

Maturity

Maturity

Liquidity

Premature withdrawal after 1 year with penalty

Premature withdrawal allowed with penalty

Premature withdrawal allowed with penalty

Partial Withdrawal possible after 5 years

Tax Benefits

No

No

No

Yes (Section 80C)

Suitable for

Fixed monthly income seekers

Saving small amounts monthly

Fixed lump sum investments

Long-term wealth creation

Conclusion

The Post Office Monthly Income Scheme (POMIS) is a simple, government-backed investment that offers steady monthly income and capital protection. With the current interest rate of 7.4% p.a., payable monthly, and the recent increase in deposit limits, it is particularly suitable for retirees and conservative investors who prioritize predictable cash flow. POMIS serves as a low-risk anchor for your portfolio, while investors can complement it with Motilal Oswal’s equity research, mutual funds, or other growth-oriented options to protect against inflation. Always check India Post notifications for the latest interest rates and guidelines before investing.

Overall, POMIS remains a secure and convenient choice for individuals seeking assured income and risk-free returns, making it a reliable option in today’s financial landscape.