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Post Office Monthly Income Scheme: Features & Interest Rate


The Post Office Monthly Income Scheme (POMIS) presents itself as a reliable savings and investment avenue offered by the Indian postal service. Investors have the opportunity to receive a consistent fixed monthly income, secured by a guaranteed interest rate, over 5 years. Furthermore, this tenure can be extended for an additional 5 years after maturity. For individuals seeking a secure and low-risk investment, this post office scheme, supported by the Indian Government, stands out as a prudent choice.

Features

  • Eligibility Criteria: While any Indian citizen can open a POMIS account, it is not available for Non-Resident Indians (NRIs).

  • Minimum Investment Amount: The account requires a modest initial deposit. The minimum account opening amount is Rs. 1000, and additional deposits can be made in multiples of Rs. 1000.

  • Maximum Investment Cap: A maximum investment of Rs. 9 Lakhs is allowed in the scheme. Even with multiple accounts in different post offices, the cumulative deposits cannot surpass Rs. 9 Lakhs. Alternatively, a joint account with 2 or 3 individuals can be established, enabling a combined investment limit of Rs. 15 lakhs.

  • Minor Account Facility: A POMIS minor account can be opened in the child's name, with an age eligibility starting from 10 years. The withdrawal can be made by the minor after reaching 18 years of age.

  • Maturity Lock-in: A minimum lock-in period of 5 years is in place, allowing withdrawals post-maturity.

  • Inflation Resilience: Despite inflationary pressures, investors can consistently receive monthly income

  • Ideal for Risk-averse Investors: Tailored for risk-averse investors seeking stable, long-term investment and regular income, making it an especially beneficial choice for senior citizens.

  • Joint Account Option: Up to 3 individuals can jointly open an account for this scheme. In joint accounts, each investor holds equal rights. The maximum investment limit for joint accounts is Rs. 15 Lakhs, while for individual accounts, it is Rs. 9 Lakhs.

  • Penalty for Early Withdrawal: Withdrawing the investment before the lock-in period incurs a penalty, the amount of which depends on the time of redemption.

  • Auto-Withdrawal Option: Monthly interest can be automatically transferred to your savings account through Post Dated Cheques (PDCs) or Electronic Clearing Service (ECS). CBS Post Office holders can redirect interest to any other CBS-centric savings account.

  • Tax Implications: The interest accrued in the Monthly Income Scheme account is not subject to Tax Deducted at Source (TDS), although it does not qualify for tax benefits under Section 80C.

  • Portability: Shifting your residence within India allows for the transfer of your POMIS account to a more convenient post office. The investment corpus and interest payments will seamlessly move to the designated post office.

  • Lock-in Duration: Once a Monthly Income Scheme account is initiated with a post office, withdrawal of the deposited amount is restricted before the completion of 5 years.

Interest Rates for POMIS for 5 years is given below:

Time interval

Interest rate for POMIS

From January 2024

7.40% (Monthly Interest ₹62 for ₹10,000/-)

1 April 2023 to 30 June 2023

7.40% p.a.

1 January 2023 to 31 March 2023

7.10% p.a.

1 October 2022 to 31 December 2022

7.10% p.a.

1 April 2020 to 30 September 2020

6.60% p.a.

1 January to 31 March 2020

7.60% p.a.

1 July 2019 to 30 December 2019

7.60% p.a.

1 January 2019 to 31 March 2019

7.70% p.a.


Procedure to Open A POMIS account:

  1. Visit the nearest post office offering POMIS

  2. Request and complete the application form, providing accurate details.

  3. Submit the form with the required documents, such as identification and address proof, along with passport-sized photographs.

  4. Deposit the initial amount, with the minimum usually set at Rs. 1000.

  5. Receive the POMIS certificate as proof of your investment.

  6. Stay informed about account details, interest rates, and maturity dates.

Note: Procedures may vary, so consult with the specific post office for precise guidelines.


Penalty for early withdrawal

Time of withdrawal

Penalty

Less than 1 year(0-1yr)

0 benefits

More than 1 year& less than 3 years

(1st yr-3rd year)

The entire deposit will be refunded after deducting a 2% of principal amount as penalty

More than 3 years & less than 5 years 

(3rd yr- 5th year)

The entire corpus will be refunded with a 1% of principal amount as penalty


Comparing POMIS vs. bank Interest Rate


Interest Rate - Investment in POMIS gives you a better return as compared to many banks interest rates . Below are the FD Interest Rate of various prominent banks 


HDFC Bank - 7.00 %

SBI Bank - 6.75%

ICICI Bank - 7.00%


Lowest Risk - Risk in investing in POMIS is lowest as compared to investing in any other banks 



Prasanna Laxmi R., Assistant Content Manager

An MBA student specializing in Finance, driven by a keen interest in exploring the complexities of finance to navigate the business landscape.


 

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