Post Office Monthly Income Scheme (POMIS) 2026: 7.4% Paid Out Every Month

The Post Office Monthly Income Scheme (POMIS) pays 7.4% a year, credited every month, for a five-year term. A single account can hold up to ₹9 lakh and a joint account up to ₹15 lakh, so ₹9 lakh pays ₹5,550 a month. The rate is unchanged for October–December 2026.

Rate and limits as of October 2026

The Finance Ministry's memorandum of 30 September 2026 kept small-savings rates for October–December unchanged from July–September (Department of Posts SB Order 12/2026). India Post's savings page, last updated 19 October 2026, lists the Monthly Income Scheme at 7.4% a year, payable monthly.

The limits come from paragraph 4 of the Monthly Income Account Scheme, 2019 as amended in 2023 (G.S.R. 490(E)). For a joint account, the scheme counts each holder's share as one half (two holders) or one third (three holders). A ₹15 lakh joint account of two adults therefore uses ₹7.5 lakh of each person's limit. Ask your post office how it applies this to accounts you already hold.

What the monthly payout looks like

Interest becomes payable once a month has passed since your deposit date, and you can have it credited to a post office savings account or bank account. If you do not claim a month's interest, it earns no additional interest under the scheme. If it is credited to a savings account, it earns that account's rate there (4% on the post office account, per India Post's booklet). The 7.4% does not compound. Your principal comes back at maturity, and an account left open after maturity earns the savings rate, not 7.4%; the scheme has no extension.

Closing early: the cost over time

On a ₹9 lakh deposit, closing in year two costs ₹18,000 and closing in year four costs ₹9,000. That is against ₹66,600 of interest a year, so an early exit is cheap compared with most lock-ins, but it still wipes out about three months of interest in year two. If the holder dies, the account can be closed and the deposit refunded with interest up to the month before the refund.

Tax on POMIS interest

POMIS has no tax deduction on the deposit. The Income-tax Act, 2025 lists the deposits that qualify under Section 123 (earlier Section 80C) in Schedule XV, and the Monthly Income Account is not among them. The interest is taxable at your slab rate whether or not the post office deducts TDS.

The TDS rule in Section 393(1) (the old Section 194A) applies to a post office deposit "under a scheme notified by the Central Government", and the Act does not list which schemes those are. So do not assume "no TDS" means "no tax". Report the interest yourself in your return.

Example: ₹9 lakh earns ₹66,600 a year. If your tax rate on extra income is 20% (before cess), tax is ₹13,320 and you keep ₹53,280, or ₹4,440 a month. At 5% you keep ₹63,270. At 0%, all ₹66,600.

POMIS or SCSS for monthly income

If you are 60 or older, the Senior Citizens' Savings Scheme pays a higher 8.2% and accepts up to ₹30 lakh, though it pays quarterly and the deposit gets a deduction in the old regime only. POMIS has no age limit, which makes it the choice for someone under 60 or for a spouse who has used their SCSS limit. A retired couple could, for instance, put ₹30 lakh in SCSS (₹20,500 a month on average) and ₹9 lakh in POMIS (₹5,550), a combined ₹26,050 a month before tax. The monthly-income comparison and the ranking of small-savings schemes set these against bank options.

Mistakes to avoid

• Expecting to add money later. An account takes a single deposit, so plan the amount before you open it.
• Treating a joint account as extra room. Each holder's share counts against their own ₹9 lakh limit.
• Leaving monthly interest unclaimed and assuming it grows. It earns nothing extra.
• Planning to withdraw in the first year. The scheme does not allow it.
• Forgetting to declare the interest because no TDS was cut.

Rates are set quarterly, so confirm the rate on the day you deposit. This is general information, not tax advice.