India Post Sovereign Backing — No Principal Loss
No principal loss risk — sovereign backing (Government of India). The Post Office Monthly Income Scheme is administered by India Post under the Government of India’s small-savings programme. Your invested principal is not exposed to market-price swings, issuer credit risk, or default risk in the way a corporate bond is. The rate and payout rules can change for new accounts when the Government revises small-savings rates, and premature closure can reduce the amount returned, but ordinary maturity repayment is sovereign-backed.
Risk rating on this instrument is 1 — Very Low on 14paisa.
Key Facts
What is the Post Office Monthly Income Scheme (POMIS)?
The Post Office Monthly Income Scheme (POMIS), also called the Monthly Income Account, is a small-savings scheme offered through India Post on behalf of the Government of India. You deposit a lump sum, earn a fixed rate for the account’s current terms, and receive interest every month in your linked savings account. The interest does not compound inside the MIS account: the monthly payment is income, not an automatic reinvestment. The current rate shown here is 7.40% p.a. for July–September 2026; the Government may revise rates for new deposits from quarter to quarter.
How the monthly interest is calculated and paid
The monthly interest is broadly calculated as deposit × annual rate ÷ 12. At 7.40% p.a., a ₹1,00,000 deposit produces ₹616.67 per month before tax (₹1,00,000 × 7.40% ÷ 12). A fully used ₹9 lakh single-account limit produces ₹5,550 per month, while a ₹15 lakh joint-account limit produces ₹9,250 per month, before tax. India Post credits the interest monthly to the account or bank details recorded for the account. If you do not withdraw it, it does not earn additional MIS interest; ask the post office about the applicable savings-account treatment for any unclaimed or credited amount.
Eligibility: residents, joint accounts, and minors
A POMIS account can be opened by a resident individual. A single account is held by one adult; a joint account can be held by up to three adults, with the account limit applying to the joint holding. A guardian may open an account for a minor. A minor who has attained the prescribed age under the post-office rules may also operate an account in their own name, subject to the applicable procedure. Non-residents cannot open a fresh MIS account, so check your status and the required KYC documents before subscribing.
₹1,000 minimum; ₹9 lakh single and ₹15 lakh joint maximum
The minimum deposit is ₹1,000, with additional deposits in multiples prescribed by India Post. The maximum aggregate balance is ₹9 lakh across an individual’s single accounts and ₹15 lakh across joint accounts. A person’s share in a joint account is counted for the overall individual limit, so opening multiple accounts does not create a fresh personal cap. Keep the account statements and nomination details updated, especially when using more than one post office account.
Five-year tenure and what happens at maturity
POMIS runs for five years from the date of account opening. The monthly interest is paid during the term and the deposited principal is repayable at maturity. This is a payout product, not a compounding certificate: if you want the monthly income to grow, you must decide separately where to reinvest it. The interest rate is fixed for the account under the terms applicable when you open it, while future small-savings rate announcements affect new accounts rather than rewriting the rate on an existing account.
Premature closure: after one year, with a principal deduction
Normal premature closure is not available during the first one year. After one year, you can request closure, but the amount returned is reduced under the scheme rules: closure after one year and before three years attracts a 2% deduction from principal; closure after three years and before maturity attracts a 1% deduction from principal. The post office will settle the account under the rules in force and may adjust the interest payable; confirm the exact settlement calculation at the issuing branch. Death-related closure and other exceptional cases can follow separate rules.
Taxation: taxable interest, no 80C deduction, conditional TDS
POMIS interest is taxable as “Income from Other Sources” at your applicable slab rate. The deposit itself does not qualify for a Section 80C deduction. India Post may deduct TDS under Section 194A when your annual interest from the relevant payer crosses the applicable threshold; under the current threshold structure, that is generally ₹50,000 for most resident individuals and ₹1,00,000 for resident senior citizens. TDS is only a credit against your final tax bill, not the final tax rate. If eligible, submit Form 15G or Form 15H in time to request no TDS, and still report the full interest in your income-tax return.
Risks: sovereign backing does not remove every trade-off
POMIS has sovereign backing, so ordinary maturity principal is not exposed to the credit risk of a corporate issuer. But there are still practical risks: inflation can reduce the purchasing power of a fixed 7.40% payout; the monthly interest is taxable; reinvestment may earn a lower rate when the five-year account matures; money is not fully liquid during the first year; and future small-savings rates can change for new accounts. The account also pays simple monthly income rather than compounding, so it may lag a cumulative product when the goal is long-term growth rather than cash flow.
How to open a POMIS account through India Post
Visit a post office that offers small-savings accounts with your completed account-opening form, PAN, identity and address proof, photographs, nominee details, and the deposit amount through an accepted payment method. Ask the counter to confirm the current rate, maximum-balance calculation, monthly-credit instructions, premature-closure terms, and KYC requirements before signing. India Post’s official website is the right place to start, but the issuing post office is the final source for the account form and operational process.
POMIS vs SCSS, PPF, Post Office TD, and bank FDs
SCSS is aimed at eligible senior citizens, pays quarterly, offers a higher current rate, and allows a Section 80C deduction on the deposit. PPF is a much longer, cumulative, EEE-taxed account with a ₹1.5 lakh annual deposit cap rather than a large lump-sum monthly-income limit. A Post Office Time Deposit is closer to an FD and can be cumulative or interest-paying depending on the chosen term; only the five-year TD qualifies for 80C under the relevant rules. A bank FD can offer more tenure and payout choices, but its protection comes through the bank’s credit quality and DICGC insurance limits, not the Government of India’s small-savings backing. Choose POMIS when predictable monthly cash flow matters more than compounding or easy early liquidity. Compare the post-office options side by side before deciding.
Common questions
The current rate used in this guide is 7.40% per year for July–September 2026. Interest is credited monthly and is calculated broadly as deposit × 7.40% ÷ 12: ₹9 lakh produces ₹5,550 per month and ₹15 lakh produces ₹9,250 per month, before tax. The interest does not compound inside MIS.
The minimum deposit is ₹1,000. The maximum is ₹9 lakh across an individual’s single accounts and ₹15 lakh across joint accounts. A person’s share in a joint account counts toward their overall individual limit, so multiple accounts cannot be used to bypass the cap.
Resident individuals can open a single account, and up to three adults can hold a joint account. A guardian may open an account for a minor, and a minor who meets the prescribed age and operating rules may open one in their own name. Non-residents cannot open a fresh MIS account.
Not normally during the first year. After one year and before three years, closure attracts a 2% deduction from principal. After three years and before maturity, the deduction is 1% of principal. Ask the issuing post office for the exact settlement amount and any exceptional-case rule that applies.
The monthly interest is taxable at your slab rate and the deposit does not qualify for Section 80C. TDS may apply under Section 194A when annual interest crosses the applicable threshold, generally ₹50,000 for most resident individuals and ₹1,00,000 for resident senior citizens under the current threshold structure. Eligible investors can submit Form 15G or 15H, but must still report the interest.