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Post Office Monthly Income Scheme Calculator

The Post Office Monthly Income Scheme (POMIS) offers Indian investors a government-backed savings vehicle that pays fixed monthly interest. Whether you're nearing retirement, seeking predictable cash flow, or want a low-risk complement to equities, POMIS delivers steady income without market exposure. This calculator reveals your exact monthly payout based on your investment amount and the current interest rate, plus early withdrawal penalties if applicable.

Last updated:

Creators Tibor Pál, PhD candidate Economics
1,230 people find this calculator helpful

Understanding the Post Office Monthly Income Scheme

POMIS is a post office investment product designed for individuals and joint account holders seeking regular, predictable income. The scheme operates on a simple principle: you deposit capital, and the Post Office pays you fixed interest monthly for five years.

Key features include:

  • Government-backed security with no credit risk
  • Monthly interest payments throughout the 5-year maturity period
  • Flexibility to open individual accounts (up to Rs. 4.5 lakh), joint accounts (up to Rs. 9 lakh), or guardian accounts for minors
  • Current interest rate of 6.6% per annum, set by the Department of Posts
  • Minimum opening deposit of Rs. 1,000

Unlike recurring deposits or savings accounts where unclaimed interest earns additional returns, POMIS interest does not compound. This makes reinvestment critical if you want to leverage compound growth—many investors redirect monthly income into a recurring deposit account.

Monthly Income Calculation

Your monthly income from POMIS is calculated using a straightforward linear formula based on your principal, annual interest rate, and the 12-month period:

Monthly Income = (Principal × Annual Interest Rate) ÷ 1200

  • Principal — The amount you invest in the POMIS account (in rupees)
  • Annual Interest Rate — The annual percentage rate set by the Post Office (currently 6.6%)

Using the Calculator and Early Withdrawal Penalties

Enter your investment amount and the applicable interest rate to determine your monthly income. The calculator also estimates penalty charges if you withdraw before maturity.

Premature closure penalties:

  • Withdrawal between years 1 and 3: 2% of principal forfeited
  • Withdrawal between years 3 and 5: 1% of principal forfeited

For example, investing Rs. 3 lakh at 6.6% yields Rs. 1,650 monthly. If you close after 2 years, you lose Rs. 6,000 (2% penalty), reducing net returns. The calculator displays these penalties automatically, helping you assess whether early exit costs are justified.

Key Considerations Before Investing

POMIS suits conservative investors but comes with important caveats to evaluate carefully.

  1. Interest Does Not Compound — Unclaimed monthly interest from POMIS does not earn additional interest, unlike savings accounts. To harness compound growth, reinvest your monthly income into a recurring deposit or other vehicle. This simple step can significantly boost long-term wealth accumulation over the 5-year period.
  2. Tax Liability on Interest Income — Although the Post Office does not deduct TDS (tax deducted at source) on POMIS interest, you must declare this income in your annual tax return and pay applicable tax according to your income slab. Plan accordingly to ensure you set aside funds for tax obligations and avoid penalties.
  3. Penalty Structure Erodes Returns — Closing your account within the first three years incurs a 2% penalty on principal—a significant cost on larger deposits. Ensure your investment horizon aligns with the 5-year maturity before committing capital. Early liquidity needs often justify choosing more flexible investment vehicles instead.
  4. Interest Rate Risk — The 6.6% rate is subject to change by the government. While POMIS is safer than equity investments, returns may decline if rates are reduced. Compare rates periodically with fixed deposits and other post office schemes to ensure your allocation remains competitive.

Account Types and Investment Limits

POMIS flexibility accommodates different investor profiles and family structures. You can open an account as a sole proprietor, with up to two co-investors (joint account), or as a guardian for a minor aged 10 or older. Account transfers between holders are permitted, though the scheme itself is not transferable to third parties.

Investment boundaries:

  • Individual accounts: minimum Rs. 1,000, maximum Rs. 4.5 lakh
  • Joint accounts: minimum Rs. 1,000, maximum Rs. 9 lakh
  • Guardian accounts for minors: follow individual limits

No upper age limit applies; senior citizens and retirees form a core demographic benefiting from predictable monthly cash flow. Joint accounts are popular among spouses or elderly parents seeking consolidated, manageable income streams.

Frequently Asked Questions

What is the minimum and maximum investment amount for POMIS?

The minimum deposit is Rs. 1,000. Individual account holders can invest up to Rs. 4.5 lakh, while joint account holders (up to three people) can invest a maximum of Rs. 9 lakh. These limits apply per account, so you could open multiple accounts if needed, though this adds administrative complexity and may trigger higher tax scrutiny on interest income.

How long is the maturity period for a POMIS account?

The standard maturity period is 5 years from the date of deposit. After 5 years, your principal is returned. You then have the option to reinvest the entire amount in a fresh POMIS account, transfer it to another post office scheme, or withdraw it entirely. The scheme does not offer automatic rollover, so you must take action at maturity to continue earning returns.

Can I withdraw my money before 5 years from a POMIS account?

Yes, you can withdraw prematurely after completing 1 year. However, early withdrawal incurs penalties: 2% of principal if withdrawn between years 1 and 3, and 1% if withdrawn between years 3 and 5. These penalties significantly reduce net returns, so early exit should only be considered for genuine financial emergencies unless the cost-benefit analysis justifies the loss.

Is the interest earned from POMIS subject to income tax?

Yes, all interest earned from POMIS is fully taxable as per your applicable income tax slab. No TDS is deducted by the Post Office, but you must declare the interest income in your annual tax return and pay tax accordingly. Depending on your total income, this could push you into a higher bracket, so factor tax liability into your net return calculations.

How does POMIS interest compare with bank fixed deposits?

Most banks currently offer fixed deposit rates of 5–6% per annum, while POMIS pays 6.6%, making it more attractive on a nominal basis. However, compare effective returns after accounting for tax rates applicable to you, early withdrawal options (banks often have lower penalties), and liquidity needs. Bank FDs may be preferable if flexibility is a priority.

What documents do I need to open a POMIS account?

To open an account, visit your nearest post office with a completed application form, proof of identity (Aadhaar, passport, or PAN), proof of address, and an initial cheque for your deposit amount. For joint accounts, all holders must provide identification documents. Minor accounts require guardian documents. Processing typically takes 5–7 working days after submission.

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