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In India, multiple government-backed schemes are available to help you meet your financial needs with fixed periodic payouts. The post office monthly income scheme is one of them and offers a steady monthly income with a higher interest rate as compared to other monthly income investments.

It is specifically designed for conservative investors and older adults, wherein they can start with a minimum amount of Rs. 1500 as an investment. The invested amount gets locked for the tenure of five years under the government’s protection. However, interest (at the applicable rate) is added to this invested amount and payable to the depositor in the form of monthly payouts. Moreover, upon maturity, it allows the depositor to withdraw the whole invested amount.

For instance, Mr. Sharma invested Rs. 1, 00,000 in monthly income scheme for five years. As per the latest interest rate of 6.6 %, he will get Rs.550 as monthly income for that period, and upon maturity of the plan, he can withdraw his invested amount of Rs. 1, 00,000 from any post-office or receive directly into his savings account.

Features of post office monthly income scheme

  • Eligibility

Every Indian citizen of age 10 years or above is eligible to avail of the benefits of this scheme through a single account, joint account, or minor account.

Joint account: A maximum of three individuals can apply for a joint account for this monthly income scheme, and each of them possesses an equal share.

Minor account: A minor account can be opened for this scheme on the name of a child of age 10 years or above. After maturing to 18 years, the minor can withdraw the invested amount.

  • Minimum and maximum investment limit

It is a small saving investment. The minimum investment amount for all eligible individuals is Rs. 1500 whereas; the maximum amount of investment in this scheme is Rs. 4.5 lakhs for a single account, Rs. 9 lakhs for a joint account, and Rs. 3 lakhs for a minor account. 

Note: An individual can hold multiple account ownership on a single name in this scheme, but the aggregate of deposits must not exceed the maximum limit.

  • Lock-in period

There is a lock-in period of five years from the account opening date. During this period, the depositor cannot withdraw the invested amount.

  • Flexibility

In the event of shifting to any other city in India, it is easy to transfer the post office monthly income scheme account to the convenient post office without paying any extra charges.

  • Rate of interest

This scheme is under the purview of the finance ministry of India, and based on the returns yielded by the Ministry or the Government, the interest rates are resettled quarterly. Although the interest rate of the post office monthly income scheme decreases gradually over time, it offers a better return than many other monthly schemes. Currently, the interest rate is 6.6%. 

  • Nominee

In case the depositor passes away, the nominee can claim the benefits and investment corpus.

Benefits of post office monthly income scheme

  • Low-risk investment

In this scheme, invested money is not subjected to market risk so you can feel safe after investing your money in this scheme. 

  • Steady and guaranteed returns

You get dual benefits – fixed monthly income and guaranteed investment corpus after maturity irrespective of market fluctuations. The steady flow of monthly payouts helps you to meet your financial needs. 

  • Reinvestment

After the maturity of your existing post office monthly income scheme, you can re-invest the corpus for another five years in the same scheme. 

  • No TDS

Neither investment nor income under this scheme gets any tax-benefit. However, it has no TDS deduction.

Procedure for opening an account under the post office monthly income scheme

To open an account under the post office monthly income scheme, you need to follow the following steps:

Step 1: Visit your nearest post office and open the savings account (if you don’t have one).

Step 2: Get a POMIS Form from the post-office or download it from the web.

Step 3: Fill all the credentials like age, name, date of birth, contact number, and submit the form along with required documents like:

  • Any identity proof like Aadhaar card/ Driving license/Voter ID/Passport
  • Address proof
  • Passport size Photographs

Note: You need to submit the originals for verification purposes, and all the photocopies must be self-attested.

Step 4: Pay the capital amount via cash or a dated cheque.

Read: Term + Ulip Combo For Optimal Returns, Risk and Tax Savings

Consequences of early withdrawal under the post office monthly income scheme

As stated above, there is a lock-in period of five years in this scheme. So, if you withdraw your investment corpus before this period, then you need to bear penalties on your investment depending on the time of POMIS withdrawal.

  • In case of withdrawal before completing one year of the scheme:

You will not get any benefit at all

  • In case of withdrawal within the 1st and 3rd year of the scheme:

You will be charged with 2% penalty on your investment corpus

  • In case of withdrawal within the 3rd and 5th year of the scheme:

You will be charged with 1% penalty on your investment corpus

Final note

Although the post office monthly income scheme is a small-saving scheme, it matches the interest of those who are looking for fixed monthly income on their investment corpus without any risk. Low-risk investors and senior citizens generally invest in this scheme and enjoy the benefit of regular income to maintain a general lifestyle through their one-time investment. So, if you are also seeking guaranteed funds and assured monthly income, then you must think about the same.

Naval Goel is the founder of He is an Associate Member of the Indian Institute of Insurance`, Pune. He has been authorized by IRDA to act as a Principal Officer of Insurance Web Aggregator.
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