Definition
The Post Office Monthly Income Scheme (POMIS) is a sovereign-backed savings scheme administered by India Post under the Post Office Monthly Income Account Scheme, 2019 (Government Savings Promotion Act, 1873). It provides GoI-guaranteed monthly income at a fixed rate set quarterly by the Ministry of Finance; the current rate is 7.4% p.a. (Q1 FY2025-26), disbursed as monthly interest. POMIS carries the sovereign guarantee of the Government of India throughout its tenure. The scheme is available only to resident Indian individuals — NRIs are not eligible to open new accounts.
How it works
Accounts are opened at any post office with a minimum deposit of ₹1,000 (multiples of ₹1,000). Deposit limits: ₹9 lakh (single account) and ₹15 lakh (joint account), raised from ₹4.5L/₹9L from April 2023. Tenure: 5 years; on maturity the full principal is returned. Monthly interest is auto-credited to a linked Post Office Savings Account. Interest does not compound — POMIS is a pure income instrument, not a wealth accumulation vehicle. Premature withdrawal: after 1 year (2% penalty before 3 years; 1% penalty after 3 years).
Tax treatment
POMIS deposits do not qualify for any tax deduction (no Section 80C benefit). Monthly interest is fully taxable as "Income from Other Sources" at the investor's slab rate. The Post Office does not deduct TDS on POMIS interest — investors must self-declare and pay advance tax if applicable. Senior citizen investors may claim the Section 80TTB deduction of up to ₹50,000/year aggregating POMIS, savings account, and other deposit interest.
Worked example
Meena, aged 65, opens a POMIS joint account with her spouse for ₹15 lakh at 7.4% p.a. Monthly interest: ₹15,00,000 × 7.4% ÷ 12 = ₹9,250/month = ₹1,11,000/year. After Section 80TTB deduction (₹50,000), taxable POMIS interest = ₹61,000. At her 5% effective slab, tax = ₹3,050/year. Net annual income: ≈₹1,07,950. At maturity (5 years), ₹15 lakh principal is returned in full — GoI sovereign guarantee backing both capital and income stream throughout the tenure.
See also
- SCSS — Senior Citizens Savings Scheme
- PPF — Public Provident Fund
- SGB — Sovereign Gold Bond
- Retirement Planning for NRIs
- India Post — Small Savings Schemes
Primary source
Post Office Monthly Income Scheme — indiapost.gov.in
Disclosure: MintByte Investment Advisers is a SEBI-Registered Investment Adviser (RIA) bearing registration number INA000017633 and SEBI Research Analyst registration number INH000014245, ARN-314872, and APMI APRN-01658. The information contained herein is for educational and informational purposes only and does not constitute investment advice or a solicitation to buy or sell any securities or investment products. Past performance is not indicative of future results. Investors are advised to read all scheme-related documents carefully and consult a qualified financial adviser before investing.