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

By Nitish Bharadwaj · Published Jul 11, 2026 · 5 min

The Post Office Monthly Income Scheme pays 7.4% per annum for the July-September 2026 quarter, credited monthly into a linked post office savings account — on deposits up to ₹9 lakh for a single holder or ₹15 lakh for a joint account. This guide covers the exact monthly payout math, premature-withdrawal penalties, why there's no 80C deduction or TDS, and how POMIS stacks up against SCSS and a bank FD's monthly-interest option for retirees who need predictable cash flow.

POMIS is the one small savings scheme built specifically to pay you every month instead of compounding your money away for years. At 7.4% per annum on deposits up to ₹9 lakh, it's a fixture for retirees who want a predictable monthly cheque without touching the stock market — but the rules on limits, penalties, and tax treatment trip up more savers than the scheme's simplicity suggests.

Current Rate and Deposit Limits

The Post Office Monthly Income Scheme currently pays 7.4% per annum, unchanged for the July-September 2026 quarter under the Finance Ministry's June 30, 2026 small savings notification. A single account can hold up to ₹9 lakh; a joint account (2 or 3 holders) can hold up to ₹15 lakh. The minimum deposit is ₹1,000, in multiples of ₹1,000, and there's no cap on how many accounts you open, provided your combined deposits across all self-owned accounts stay within the ₹9 lakh limit.

What the Monthly Payout Actually Looks Like

Interest is calculated annually but credited to your linked post office savings account every month. On the maximum single deposit of ₹9 lakh, that works out to roughly ₹5,550 a month; on the maximum joint deposit of ₹15 lakh, about ₹9,250 a month. Unlike a bank recurring or cumulative FD, none of this interest is reinvested automatically — it lands in your savings account and you decide what to do with it. If you don't withdraw a month's payout, it simply earns the post office savings account's regular (lower) interest rate sitting there, it doesn't compound at the 7.4% POMIS rate.

Premature Withdrawal: The Penalty Gets Smaller Over Time

You cannot close a POMIS account within the first year at all, except on the account holder's death. Between 1 and 3 years, closing early costs you a 2% deduction from your principal. Between 3 and 5 years, the penalty drops to 1%. There's no way to withdraw earlier than 1 year under normal circumstances, so POMIS money should be money you're confident you won't need in the first 12 months.

• Before 1 year: closure not permitted (barring death of the account holder)
• 1 to 3 years: 2% of the principal is deducted on premature closure
• 3 to 5 years: 1% of the principal is deducted on premature closure
• At 5 years (maturity): full principal returned, or the account can be renewed for another 5-year term at the rate then in force

Tax Treatment: No TDS, But Fully Taxable

Who Can Invest, and How Many Accounts

Any resident Indian adult can open a POMIS account; a minor above 10 can hold one in their own name, and younger children can hold one through a guardian. HUFs, trusts, and NRIs are not eligible. Joint accounts allow up to 3 holders, and each holder is entitled to an equal share of the monthly payout unless otherwise specified. A nominee can be added or changed at any time — on the account holder's death, the balance and accrued interest pass to the nominee, closing the account outside the normal 5-year lock-in.

POMIS still requires a physical visit to a post office branch to open — there's no online account-opening option as of 2026, unlike some bank FDs you can open from a mobile app. If you're weighing POMIS against other retirement-income options, our SCSS vs bank FD comparison for senior citizens covers the higher-paying quarterly alternative, our ranked comparison of every small savings scheme lines POMIS up against SSY, SCSS, NSC, and KVP by rate, and FD laddering shows an alternative way to generate a similar monthly cash flow from bank deposits. For a direct side-by-side on which of the three actually pays the most each month on the same deposit size, see our SCSS vs POMIS vs senior citizen FD monthly income comparison.