Post Office Savings Scheme – The Indian government’s small savings schemes continue to attract massive public attention, especially among conservative investors. One such option—the Post Office Monthly Income Scheme (POMIS)—has gained renewed interest after recent calculations showed a potential interest return of ₹2,24,974 on a ₹5 lakh investment. This scheme, backed by sovereign guarantee, offers a safe and attractive return with monthly payouts, making it ideal for senior citizens, homemakers, and salaried individuals seeking fixed monthly income.
What is the Post Office Monthly Income Scheme (POMIS)?
The Post Office Monthly Income Scheme is a government-backed savings plan offering guaranteed monthly returns on a one-time lump sum investment. It is one of the most trusted savings instruments among Indians due to its risk-free nature and steady returns.
Key Features of POMIS:
- Fixed interest rate set by the Ministry of Finance
- Monthly interest payouts
- Lock-in period of 5 years
- Premature withdrawal allowed with certain conditions
- Joint account facility available
How ₹5 Lakh Investment Grows Under POMIS
If an individual invests ₹5 lakh in the POMIS, the current interest rate of 7.4% per annum (as of Q2 FY 2025) provides a solid monthly income. Here’s a breakdown of how your investment grows:
Monthly & Total Interest Calculation on ₹5 Lakh Investment
| Particulars | Value |
|---|---|
| Investment Amount | ₹5,00,000 |
| Interest Rate (Per Annum) | 7.4% |
| Monthly Interest Earned | ₹3,083 |
| Total Interest in 1 Year | ₹36,996 |
| Total Interest in 5 Years | ₹1,84,980 |
| Maturity Amount After 5 Years | ₹5,00,000 (Principal) |
| Total Return After 5 Years | ₹6,84,980 |
| Effective Gain (Interest Earned) | ₹1,84,980 |
How to Earn ₹2,24,974 from POMIS?
This return is possible in case of joint accounts where the maximum investment limit is ₹9 lakh. Here’s a sample calculation for ₹9 lakh investment:
| Particulars | Value |
|---|---|
| Investment Amount (Joint) | ₹9,00,000 |
| Interest Rate (Per Annum) | 7.4% |
| Monthly Interest Earned | ₹5,550 |
| Total Interest in 5 Years | ₹2,22,000 |
| Total Return After 5 Years | ₹11,22,000 |
| Effective Gain | ₹2,22,000 |
Who Should Invest in POMIS?
This scheme is ideal for individuals who prefer capital protection and regular monthly income. Here’s who benefits the most:
- Retired senior citizens looking for monthly income without risk
- Homemakers wanting safe investment for idle funds
- Salaried individuals seeking diversification of savings
- Parents investing for children’s regular future expenses
Benefits of the Post Office Monthly Income Scheme
- Capital safety: Being government-backed, the scheme carries zero default risk.
- Fixed monthly income: Ideal for budgeting household expenses.
- Taxation: Interest is taxable, but no TDS is deducted, offering liquidity benefits.
- Accessibility: Available across India in all post office branches.
- Joint account facility: Couples or family members can invest jointly and earn more.
Updated Interest Rates of Post Office Schemes (Q2 FY 2025)
| Scheme Name | Interest Rate (Annual) | Lock-In Period |
|---|---|---|
| Post Office Monthly Income Scheme (POMIS) | 7.4% | 5 years |
| Senior Citizen Savings Scheme (SCSS) | 8.2% | 5 years |
| National Savings Certificate (NSC) | 7.7% | 5 years |
| Public Provident Fund (PPF) | 7.1% | 15 years |
| Kisan Vikas Patra (KVP) | 7.5% | 115 months |
| Sukanya Samriddhi Yojana (for girl child) | 8.0% | 21 years |
| Post Office Recurring Deposit | 6.7% | 5 years |
| Post Office Time Deposit (5 Years) | 7.5% | 5 years |
How to Open a POMIS Account
Opening a POMIS account is simple and requires minimal documentation:
Steps:
- Visit the nearest post office branch
- Fill out the POMIS account opening form
- Submit KYC documents (ID, address proof, photo)
- Deposit the investment amount via cheque or cash
- Nominee option can be selected during account opening
Important Rules and Limits of POMIS
| Category | Maximum Investment Limit |
|---|---|
| Individual Account | ₹5,00,000 |
| Joint Account (2-3 adults) | ₹9,00,000 |
| Minor Account | ₹3,00,000 |
| Lock-in Period | 5 years |
| Premature Closure | Allowed after 1 year |
| Penalty on Premature Exit | 1%–2% of deposit amount |
The Post Office Monthly Income Scheme is a reliable and beneficial investment option, especially for those seeking a fixed income with capital security. With guaranteed returns, joint account flexibility, and ease of access through local post offices, POMIS is a strong contender in any conservative investment portfolio. Whether you are a retiree or a salaried individual looking for diversification, investing ₹5 lakh in POMIS can generate monthly income and peace of mind for 5 years straight.
FAQs
Q1. Is the Post Office Monthly Income Scheme safe?
Yes, POMIS is backed by the Government of India and is considered one of the safest investment options.
Q2. Can I open a POMIS account online?
As of now, POMIS account opening requires a physical visit to the post office. Online opening is not yet available.
Q3. Is the interest earned on POMIS taxable?
Yes, the interest is fully taxable as per your income slab. However, no TDS is deducted by the post office.
Q4. Can I reinvest the monthly interest?
Yes, you can reinvest the monthly payout into other savings instruments like Recurring Deposit or Time Deposit for compounding benefits.
Q5. What happens if I withdraw early from POMIS?
Premature withdrawal is allowed after one year but with a penalty of 1%–2% on the principal amount depending on the tenure completed.