1. Introduction to Post Office Monthly Income Scheme

The Post Office Monthly Income Scheme (POMIS) is one of India's most reliable small savings instruments. It was created to help investors — especially retirees and middle-class families — earn a steady, risk-free monthly income.

Backed by the Government of India, POMIS combines safety, predictability, and accessibility. It works like a fixed deposit but pays monthly interest, making it ideal for those needing regular income. With a tenure of 5 years, modest entry requirements, and attractive interest (~7.4%), it continues to be a trusted choice for conservative investors.

POMIS is especially useful for retirees who depend on fixed income for household expenses. Instead of risking money in markets, they get reliable payouts — just like a pension substitute.

2. What is POMIS?

Definition:

POMIS is a fixed-return savings scheme offered by India Post, providing guaranteed monthly income backed by the Government of India.

Salient Features:

• Fixed tenure of 5 years
• Interest ~7.4% p.a., paid monthly
• Min deposit ₹1,000; max ₹9 lakh (single), ₹15 lakh (joint)
• No market risk, government-backed
• Nomination & joint holding allowed

Example:

Invest ₹9 lakh (max single). At 7.4%, annual interest = ₹66,600 → monthly payout ~₹5,550 for 5 years.

Essentially, POMIS = FD with monthly payout, safer than bank schemes.

3. How it Differs from Other Savings Options

POMIS = safer than FD, more flexible than SCSS, but with no tax benefits.

4. Coverage / Examples

While not "insurance," POMIS covers income needs in scenarios like:

• Retirees: Monthly payout ensures pension-like cash flow
• Families: Extra cash flow for household expenses
• Dependents: Financial security for non-working members
• Medium-Term Goals: Education, rent supplement, travel funds

Examples:

• Invest ₹6 lakh → monthly payout ~₹3,700
• Retired couple invests ₹15 lakh (joint max) → monthly payout ~₹9,250

5. Why You Need POMIS

• Provides fixed monthly income → peace of mind
• Safer than equities/mutual funds
• Higher rates than savings accounts
• Useful for retirees, homemakers, conservative investors
• Government guarantee ensures zero risk

POMIS is a perfect salary replacement for retirees.

6. Detailed Key Features

• Issuer: Government of India
• Tenure: 5 years
• Interest: ~7.4% (monthly payout)
• Deposit Limits: ₹1,000 – ₹9 lakh (single), ₹15 lakh (joint)
• Nomination: Yes
• Joint Accounts: Up to 3 holders
• Premature Closure: After 1 year (penalty 1–2%)
• Tax: Interest taxable
• Mode: Only via post offices (currently)

7. What's Not Covered (Exclusions)

• No Section 80C benefit
• Interest taxable
• No premature withdrawal before 1 year
• No market-linked growth (returns fixed)
• Inflation risk: Real value may fall
• Max cap ₹9–15 lakh, limits corpus size

8. Tax Benefits

• Investment: No 80C deduction
• Interest: Fully taxable under "Income from Other Sources"
• TDS: Not deducted by post office, but must be declared by investor

Example:

Invest ₹9 lakh → annual interest ₹66,600 → taxed as per slab:

• 10% slab = ₹6,660 tax
• 20% slab = ₹13,320 tax
• 30% slab = ₹19,980 tax

Net yield depends on tax bracket. Still useful for seniors in lower tax slabs.

9. How to Choose the Right Plan

Since POMIS is a standardized government scheme, the features are identical across all post offices. However, you can plan smartly:

Investment Amount:

• Single account → up to ₹9 lakh
• Joint account (up to 3 adults) → up to ₹15 lakh
• Ladder investments across years for staggered maturity

Monthly Income Needs:

Calculate household expenses and invest accordingly.

• ₹6 lakh investment → ₹3,700 monthly
• ₹15 lakh → ₹9,250 monthly

For Retirees:

Combine SCSS (quarterly payout) with POMIS (monthly payout) for smooth cash flow.

Tax Planning:

• No 80C benefit; interest taxable
• Place POMIS in name of lower-tax-slab spouse to minimize tax burden

Choose POMIS if you want guaranteed monthly income without market risks.

10. Detailed Comparison (POMIS vs FD vs SCSS vs PMVVY)

Verdict: POMIS = reliable monthly payouts, but SCSS is better for higher rates + tax savings.

11. When to Invest

• At Retirement: Park PF/gratuity into POMIS for monthly pension-like payouts
• For Homemakers: Safe way to generate extra income from savings
• For Dependents: Helps provide monthly income to children/spouse
• For Middle-Class Families: Useful supplement for monthly expenses
• For Senior Citizens: Combine with SCSS/PMVVY for balanced retirement planning

Best time = immediately after receiving lump sum from retirement or inheritance.

12. Common Myths About POMIS

• Myth 1: "POMIS interest is tax-free."
  Truth: Interest is taxable under IT Act.
• Myth 2: "Anyone can invest unlimited amounts."
  Truth: Max cap = ₹9 lakh single, ₹15 lakh joint.
• Myth 3: "Returns keep increasing."
  Truth: Fixed rate, reviewed quarterly.
• Myth 4: "POMIS is only for retirees."
  Truth: Any resident Indian can open.
• Myth 5: "Money can be withdrawn anytime."
  Truth: Lock-in = 1 year; premature closure penalties apply.

13. Steps to Open & Operate POMIS Account

To Open POMIS Account:

1. Visit post office
2. Fill POMIS application form
3. Submit KYC docs (Aadhaar, PAN, address proof, photo)
4. Deposit amount (cash/cheque/transfer)
5. Get passbook

Operation:

• Monthly interest credited to post office savings account
• At maturity (5 years), principal returned
• Option to reinvest in new POMIS or other schemes

14. Premature Closure Rules

• Before 1 year: No interest paid, only principal returned
• After 1 year but before 3 years: Deduction of 2% of principal
• After 3 years but before maturity: Deduction of 1% of principal
• After 5 years: Full maturity (principal + interest)

Note: Partial withdrawals not allowed — only full account closure.

15. Future Trends

• Digital Access: Government may allow POMIS purchase/management via net banking in future
• Revised Limits: Likely higher caps for individuals/joint accounts
• Stable Rates: Returns expected to remain above FDs
• Urban Penetration: More awareness campaigns to attract middle-class investors
• Complementary Role: POMIS will remain relevant alongside SCSS, PMVVY, and bonds

16. Case Studies & Real-Life Examples

Case 1: Retired Couple

Mr. & Mrs. Iyer invested ₹15 lakh in POMIS (joint max). Earn ~₹9,250 monthly. Along with SCSS income, they maintain comfortable retirement.

Case 2: Homemaker

Sunita invested ₹5 lakh in POMIS with inheritance. Earns ~₹3,083 monthly, which she uses for household expenses.

Case 3: Middle-Class Family

Ramesh invested ₹3 lakh in POMIS to provide stable monthly support for his parents. Earns ~₹1,850/month, covering medicines.

17. Frequently Asked Questions (FAQs)

1. Who can invest in POMIS?
   Any resident Indian adult can invest in POMIS.
2. Can NRIs invest?
   No, NRIs are not eligible to invest in POMIS.
3. What's the tenure?
   5 years fixed tenure with guaranteed monthly returns.
4. What is the minimum investment?
   ₹1,000 is the minimum investment amount.
5. What is the maximum limit?
   ₹9 lakh for single accounts and ₹15 lakh for joint accounts.
6. What's the current interest rate?
   ~7.4% per annum, paid monthly.
7. How is interest paid?
   Monthly, directly credited to your linked post office savings account.
8. Is interest taxable?
   Yes, interest is fully taxable under "Income from Other Sources."
9. Is there any Section 80C benefit?
   No, POMIS does not qualify for Section 80C tax deduction.
10. Can joint accounts be opened?
    Yes, up to 3 holders can open a joint account.
11. What happens on maturity?
    Principal is returned with option to reinvest in a new POMIS or other schemes.
12. Can the account be closed early?
    Yes, after 1 year with applicable penalty (1-2% of principal).
13. Is nomination allowed?
    Yes, nomination facility is available.
14. Can minors invest?
    Yes, minors can invest through their guardian.
15. Can POMIS be transferred?
    Yes, POMIS accounts can be transferred between post offices.
16. Can POMIS be pledged as collateral?
    No, POMIS cannot be pledged as collateral for loans.
17. What if the investor dies?
    The nominee or legal heir receives the balance amount.
18. Is POMIS better than FD?
    Yes, generally offers higher returns with government guarantee.
19. Can monthly interest be reinvested automatically?
    Yes, it can be reinvested into recurring deposits or savings accounts.
20. Is POMIS safe?
    Yes, it's 100% government-backed and completely safe.

Conclusion

The Post Office Monthly Income Scheme (POMIS) is one of the best government-backed schemes for investors seeking steady monthly income. With ~7.4% interest, 5-year tenure, and guaranteed safety, it works as a pension substitute for retirees and a reliable option for families.

Although it lacks tax benefits and has a cap on maximum investment, its simplicity, accessibility, and monthly payouts make it a cornerstone for risk-averse households.

For anyone wanting regular, risk-free monthly income, POMIS is a must-have in the portfolio. The combination of government backing, predictable returns, and monthly cash flow makes it an ideal investment for those prioritizing financial stability over high-risk, high-return ventures.