How the POMIS monthly payout works
The Post Office Monthly Income Scheme is built for savers who want a steady, government-backed income every month. You deposit a lump sum, and it pays interest every month while returning the full principal at the end of the 5-year term:
So the annual interest is simply deposit × rate, split into twelve equal monthly payouts credited to your linked post office savings account. The principal is never touched — it comes back in full at maturity.
Worked examples: single vs joint maximum
On the single-account maximum of ₹9,00,000 at the current 7.4%, the annual interest is ₹66,600 (₹66.6K), paid as ₹5,550 every month. Over the full 5-year term that is ₹3,33,000 in interest, with the ₹9,00,000 principal returned at maturity.
On the joint-account maximum of ₹15,00,000, the annual interest is ₹1,11,000 (₹1.11 lakh), paid as ₹9,250 every month — ₹5,55,000 over 5 years, with the full ₹15,00,000 returned at maturity.
Single vs joint deposit limits
A single-holder account can hold a maximum of ₹9,00,000. A joint account (opened by 2 or 3 adults together) can hold up to ₹15,00,000, regardless of the number of joint holders. The minimum deposit is ₹1,000, in multiples of ₹1,000 thereafter. A depositor can hold multiple accounts, but the combined balance across all single accounts cannot exceed ₹9 lakh, and each joint holder's share counts toward their individual single-account limit.
Premature withdrawal penalty
POMIS locks your deposit for 5 years, but early exit is allowed with a deduction from the principal:
| When you withdraw | Penalty |
|---|---|
| Within the first year | Not allowed |
| After 1 year, before 3 years | 2% deducted from principal |
| After 3 years, before 5-year maturity | 1% deducted from principal |
| At full 5-year maturity | No penalty |
The deduction applies to the principal you withdraw, not the interest already paid out to you.
Tax treatment: no 80C, fully taxable
Unlike PPF, NSC and SCSS, a POMIS deposit does not qualify for a Section 80C deduction — this is a common point of confusion. The monthly interest is fully taxable at your income-tax slab rate; there is no tax-free component. Because payouts arrive monthly rather than as a lump sum, it is worth adding the annual interest to your other income when estimating tax with our income tax calculator. For a comparison against other government-backed options, see post office schemes, the SCSS calculator, and the NSC calculator.