Post Office Monthly Income Scheme (POMIS)

What is the Post Office Monthly Income Scheme?

The Post Office Monthly Income Scheme (POMIS) is a Government of India small savings scheme operated through India Post under the Ministry of Finance's National Savings framework. It is built for savers who want a fixed, regular monthly income from a one-time lump-sum deposit rather than growth. It is popular with retirees, homemakers and conservative savers because the deposit is government-backed and the payout is predictable.

According to India Post's small savings information, POMIS currently pays 7.4% per annum, payable monthly, for deposits (the rate fixed for the quarter beginning 1 January 2024). The account runs for a fixed five-year term, and the interest rate on a given account stays locked for the full term even if the Government revises small savings rates in later quarters.

Key features

• Interest of 7.4% per annum, paid every month.
• Fixed five-year tenure.
• Minimum deposit Rs 1,000; further deposits in multiples of Rs 1,000.
• Maximum deposit Rs 9 lakh for a single account, Rs 15 lakh for a joint account.
• Government-backed, with the rate locked for the whole term.

Who is eligible for POMIS?

You can open a POMIS account if you are:

• A resident Indian adult, individually or jointly (a joint account can have up to three adults).
• A minor aged 10 years or above, who can open an account in their own name.
• A guardian opening an account on behalf of a minor or a person of unsound mind.

You cannot open a POMIS account if you are:

• A Non-Resident Indian (NRI): POMIS is only for resident Indians.
• A company, trust, firm or other institution. The scheme is for individuals, not corporate entities.

A minor who has an account in their own name is subject to the same deposit limits, and on turning 18 must convert the account to a regular adult account.

What documents are required for POMIS?

How to apply for a Post Office Monthly Income Scheme account

1. Visit your nearest post office that offers small savings accounts, or use the India Post internet banking/app facility where enabled.
2. Fill the account opening form for POMIS and attach your KYC documents — Aadhaar, PAN and photographs.
3. Deposit your lump sum; at least Rs 1,000, in multiples of Rs 1,000, up to Rs 9 lakh for a single account or Rs 15 lakh for a joint account.
4. Choose how you want the monthly interest paid; auto-credit to a linked post office savings account or bank account, so the interest reaches you every month.
5. Collect the account passbook, which records your deposit and the maturity date five years ahead.

How much can you earn from POMIS?

POMIS pays 7.4% per annum, credited monthly. On the maximum single-holder deposit of Rs 9 lakh, that works out to about Rs 5,550 per month in interest; on a joint-holder deposit of Rs 15 lakh, about Rs 9,250 per month (these are illustrative at the current 7.4% rate). The principal is returned at the end of the five-year term. Because the rate is locked at opening, your monthly income does not change even if the Government cuts small savings rates later.

The interest is taxable in the depositor's hands and there is no deduction under Section 80C for POMIS deposits, so plan for the tax on the interest income.

Premature closure and maturity

POMIS does not allow premature closure in the first year. After one year the account can be closed early, but with a penalty: a 2% deduction of the principal if closed between one and three years, and a 1% deduction if closed between three and five years. At the end of five years you can withdraw the full deposit or open a fresh POMIS account subject to the deposit limits in force at that time. If the monthly interest is not withdrawn, it does not earn any extra interest, so it is best to have the payout auto-credited.

Help and where to verify details

• India Post helpline: 1800-266-6868.
• Small savings scheme details and current interest rates are published on the India Post website and are revised quarterly by the Ministry of Finance.

Interest rates and deposit limits are set by the Government and change from time to time; the figures above reflect the rate for the quarter beginning 1 January 2024 as listed at the time of fact-checking. Confirm the current quarter's rate and limits at your post office or on indiapost.gov.in before investing.