Post Office Monthly Income Scheme (POMIS): Features, Benefits & Interest Rates 

The Government of India offers several small savings schemes to help individuals build financial security. One such popular option is the Post Office Monthly Income Scheme (POMIS). Offered by India Post, this government-backed scheme is designed to provide a steady and predictable monthly income to investors. This article explains the meaning, features, benefits, limitations, interest rates, and the process of opening a POMIS account. 

What is the POMIS Scheme?

POMIS is a fixed-income small savings scheme that offers regular monthly returns. Under this scheme, you deposit a lump sum amount and receive monthly interest payouts at a fixed rate for a predefined tenure. The principal amount is returned to you upon maturity.

Features of the POMIS Scheme in post office

Here are the key features of POMIS:  

1. Safety: POMIS is a government-backed scheme offering guaranteed returns, making it an ideal option for risk-averse investors. 
2. Regular income: Unlike most other investments, the payouts are monthly. This makes it suitable for those seeking a predictable and stable cash flow. 
3. Tenure: POMIS has a fixed tenure of five years. You can withdraw or reinvest the amount at maturity.
4. Premature withdrawal: Premature withdrawal is allowed after one year, subject to applicable penalties. 
5. Minimum and maximum investment: The minimum investment is ₹1,000. The maximum permissible amount is ₹9 lakh for a single account and ₹15 lakh for a joint account. 
6. Joint account facility: You can open a POMIS account jointly with up to three adults. 
7. Minor account: A minor above the age of 10 years can open an account in their name. For minors below the age of 10 years, the account can be opened through a legal guardian. 
8. Transferability: You can transfer your account from one post office to another anywhere in India.  
9. Nomination facility: You can nominate a beneficiary who will be entitled to the proceeds after your demise.  

Also Read: Post Office Time Deposit: Meaning, Key Features and Benefits | m.Stock

Interest rates in POMIS

The Government of India reviews and announces POMIS interest rates every quarter. The interest rate for Q3 of FY 2025-2026 stands at 7.4% per annum, payable monthly. 

Interest calculation formula: 

Monthly interest: (Principal investment * Annual interest rate)/12

Example: 

Investment amount: ₹10,00,000

Annual interest rate: 7.4% 

Therefore, monthly payout = 10,00,000 * 7.4%/12 = ₹6166.67

Benefits of the POMIS Scheme

Here are some reasons that make POMIS attractive: 

1. Stable income: POMIS offers predictable returns every month, helping you meet your regular expenses. 
2. Safety: Since the scheme is government-backed, it ensures your capital is safe. Moreover, POMIS returns are not market-linked. Hence, it is ideal for low-risk investors. 
3. Short lock-in period: The five-year tenure is shorter compared to other government schemes like the Public Provident Fund (15 years). 
4. Convenience: Features like nomination, joint accounts, and easy transfer add to the scheme’s appeal. 

Also Read: Mutual Funds vs Post Office Schemes: Choose Your Option | m.Stock

Risks and limitations of POMIS

Here are some limitations to consider:  

1. No capital growth: Returns are fixed and do not benefit from market-linked growth, which may limit long-term wealth creation. 
2. Interest rate risk: If market interest rates rise, existing POMIS investments may appear less attractive. 
3. Premature withdrawal restriction and penalties: No withdrawal is allowed before one year. Withdrawals after one year but before three years attract a 2% penalty on the principal. Withdrawals after three years but before maturity attract a 1% penalty.  
4. No tax benefits: Unlike some government schemes, POMIS does not offer tax benefits under Section 80C. Moreover, the interest earned is fully taxable.

How to open a POMIS account

You cannot open a POMIS account online. The offline process is as follows: 

Step 1: Visit your nearest post office and open a savings account if you do not already have one. 

Step 2: Collect and fill out the POMIS application form. 

Step 3: Submit self-attested copies of your address and identity proof. Make sure to carry the originals for verification. 

Step 4: Choose a witness and a nominee and get the form signed by them. 

Step 5: Make the payment via cash or cheque. If you are paying by cheque, ensure the cheque date matches the account opening date. 

Once the application is processed, your account will become active, and interest payouts will begin as scheduled. 

Conclusion

POMIS is a low-risk and reliable savings scheme that provides a steady income. While it offers benefits such as capital safety and predictable returns, it also comes with limitations such as taxable interest or restricted liquidity. Before investing, you must check your goals, liquidity needs, and tax implications to determine if POMIS aligns with your overall financial plan. 

Also Read: Best Monthly Income Schemes in India