The Post Office Monthly Income Scheme (POMIS) is a popular savings scheme in India, designed to offer investors a steady and secure source of monthly income. Backed by the Government of India, this scheme is particularly attractive to conservative investors such as retirees, homemakers, and those seeking stable returns with minimal risk. Let’s explore the key features, benefits, and other important aspects of the POMIS.
Overview of POMIS
POMIS is a savings scheme offered by India Post under its broad range of financial services. The scheme enables individuals to invest a lump sum amount and earn a fixed monthly interest payout. Since it is a government-backed scheme, it carries minimal risk and assures guaranteed returns regardless of market fluctuations.
Key Features of POMIS
1. Guaranteed Monthly Income
The primary feature of POMIS is its promise of a fixed monthly income. The interest earned on the deposited amount is paid out monthly, making it ideal for people who need regular income, such as pensioners or those without a steady job.
2. Attractive Interest Rate
As of the current financial year (2025-26), the interest rate for POMIS stands at 7.4% per annum, payable monthly. This is significantly higher than the interest on regular savings accounts and comparable to some bank fixed deposits.
3. Investment Limit
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Single Account: An individual can invest up to ₹9 lakh in a single account.
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Joint Account: A maximum of ₹15 lakh can be invested in a joint account held by two or three adults. The investment limit applies collectively, not individually.
4. Lock-in Period
POMIS comes with a maturity period of 5 years. Premature withdrawals are allowed after one year but may attract a penalty.
5. Eligibility
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Only Indian residents are eligible to invest in POMIS.
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NRIs (Non-Resident Indians) are not allowed to invest.
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Minors above the age of 10 can have accounts in their names, with the guardian managing the account until they turn 18.
6. Account Types
POMIS allows:
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Single account (held by one adult)
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Joint account (up to three adults)
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Minor account (with a guardian)
Multiple accounts can be opened as long as the total investment does not exceed the prescribed limit.
Benefits of the Post Office Monthly Income Scheme
1. Low-Risk Investment
POMIS is among the safest investment instruments available. Being a government-backed scheme, it offers complete capital protection, making it ideal for risk-averse investors.
2. Steady Cash Flow
The monthly payout feature provides a regular income stream, which is beneficial for retired individuals or others who rely on fixed monthly earnings for their livelihood.
3. Simple and Transparent
The scheme is easy to understand and transparent. There are no hidden charges or market-linked complexities, and the interest is disbursed on a fixed date every month.
4. Tax Efficiency on Principal
While the monthly interest income is taxable, the principal amount invested in POMIS is not subject to TDS (Tax Deducted at Source). This ensures that the full amount is reinvested or returned at maturity without any automatic deductions.
5. Transferability
POMIS accounts can be transferred from one post office to another across India without affecting the interest payments or other account details.
6. Nomination Facility
The account holder can nominate a beneficiary to receive the investment amount in case of the account holder’s death, ensuring smooth transfer of funds.
7. Flexibility with Joint Accounts
In joint accounts, all account holders have equal rights. If one holder passes away, the account continues in the name of the remaining holders, ensuring continuity of benefits.
Interest Calculation and Payout
The interest under POMIS is calculated on a monthly basis and can be directly credited to the investor’s savings account at the post office. Alternatively, investors can also opt to receive interest in a bank account by linking it.
For instance, if an individual invests ₹9 lakh at an interest rate of 7.4% per annum, the monthly interest would be:
₹9,00,000 × 7.4% ÷ 12 = ₹5,550/month
This monthly payout continues until the end of the 5-year term.
Premature Withdrawal Rules
While POMIS has a 5-year maturity period, investors can withdraw funds early under the following conditions:
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After 1 year but before 3 years: Deduction of 2% of the principal.
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After 3 years but before 5 years: Deduction of 1% of the principal.
No interest is paid if the account is closed within one year of opening.
Comparison with Other Saving Options
| Feature | POMIS | Bank FD | Senior Citizen Saving Scheme | Mutual Funds |
|---|---|---|---|---|
| Risk | Very Low | Low | Very Low | Medium to High |
| Monthly Payout | Yes | Optional | Yes | Market dependent |
| Interest Rate (approx) | 7.4% | 6% – 7% | 8.2% | 8% – 12% (variable) |
| Tax Benefit | No | Under 80C | Under 80C | Under 80C (ELSS only) |
| TDS | No | Yes | Yes | Yes (dividends) |
This table shows that while POMIS may not provide tax deductions under Section 80C, its security and consistent returns make it a valuable investment option for risk-averse individuals.
Who Should Invest in POMIS?
POMIS is well-suited for:
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Senior citizens and retirees looking for regular monthly income.
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Homemakers or dependent family members seeking financial stability.
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Conservative investors who prioritize capital protection over high returns.
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Parents investing for minors to generate a steady income flow for future use.
How to Open a POMIS Account
To open a POMIS account, follow these steps:
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Visit the nearest post office.
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Fill out the POMIS application form.
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Submit required documents: Aadhaar card, PAN card, passport-size photographs, and proof of address.
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Deposit the investment amount via cash, cheque, or demand draft.
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Link a savings account for interest disbursal.
Online account management is not fully enabled yet, but post offices provide excellent support for account handling.
Final Thoughts
The Post Office Monthly Income Scheme is a dependable, safe, and stable investment choice for those who prefer consistent income over high-risk, high-reward financial instruments. Its low-risk profile, assured monthly payouts, and government backing make it an attractive option for retirees, homemakers, and anyone seeking to supplement their income in a stress-free manner.
While the lack of tax benefits and lower returns compared to equity-based investments may deter aggressive investors, POMIS remains a cornerstone in a well-balanced, conservative financial portfolio.