POMIS Calculator: A Paycheck From Your Savings

There's a specific moment in a lot of people's financial lives when the question stops being "how do I grow my money?" and quietly becomes "how do I make this money pay me every month?" It usually shows up when a parent retires, or when someone gets a chunk of money from a property sale or a family inheritance and doesn't want to speculate with it — they just want a reliable cheque in the account on the same day each month. That's what the Post Office Monthly Income Scheme is built for. It's not complicated, it's not exciting, and it is very specifically designed to be that reliable cheque. This guide walks through how POMIS works, how our POMIS Calculator does the math, and whether it's actually a good fit for you.

Fair warning: if you're 30 and accumulating, this scheme isn't for you. If you're 60 and decumulating — or if you're parking money for an ageing parent who needs income — this is probably exactly what you're looking for.

So What Is POMIS, Really?

The Post Office Monthly Income Scheme is a lump-sum deposit scheme where you hand over money once and the Post Office pays you the interest in equal monthly installments for a fixed tenure of 5 years. At the end of the tenure, the entire principal is returned to you intact. No compounding, no reinvestment — the interest is paid out every single month, on the same date each month, directly to your linked savings account. The current interest rate is around 7.4% per annum (notified quarterly), payable monthly.

Eligibility is wide. Any resident Indian adult can open a single POMIS account with a maximum deposit of ₹9 lakh. A joint account (up to three holders) can deposit up to ₹15 lakh. Minors above the age of 10 can operate their own account, and a guardian can open one on behalf of a younger minor. NRIs, as usual, are excluded. The minimum deposit is just ₹1,000, which is hilariously low — but the scheme only makes sense with meaningful lump sums because the monthly income scales proportionally.

How the POMIS Calculator Actually Works

POMIS math is refreshingly simple — no compounding, no fancy formulas. The calculation is:

Monthly Income = (P × r) / 12

Where P is the principal you deposit and r is the annual interest rate in decimal (e.g., 0.074 for 7.4%). So if you deposit ₹9,00,000 at 7.4%, you earn ₹9,00,000 × 0.074 = ₹66,600 per year, which the Post Office hands you as ₹5,550 every month for 60 months. Over 5 years, that's ₹3,33,000 in total interest. At the end of the 5th year, you also get your ₹9,00,000 principal back. The calculator shows all three: monthly payout, total interest, and maturity value (which equals your principal, since there's no compounding).

POMIS isn't trying to grow your money. It's trying to pay you. Conflating the two is the most common reason people walk away disappointed from a scheme that would have been perfect for their actual goal.

A Real Scenario: Meet Mrs Iyer

Mrs Iyer is 63, newly retired, and has a ₹30 lakh corpus sitting in her savings account from her PF payout. She wants part of that to reliably cover her monthly grocery and utility bills — about ₹10,000 a month — with absolutely zero market risk. She and her husband (also retired) open a joint POMIS account.

Joint accounts can hold up to ₹15 lakh. They deposit ₹15 lakh into the joint POMIS. Punch that into the POMIS Calculator at 7.4%: their monthly payout is ₹9,250, paid into their linked savings account on the same date every month for 5 years. Over the 5-year tenure, they receive ₹5.55 lakh in interest. At the end, they get their ₹15 lakh back, intact, and can re-deposit at whatever the rate is then.

For the remaining ₹15 lakh of her corpus, Mrs Iyer puts ₹15 lakh into SCSS at 8.2% (which has its own ₹30 lakh individual cap) and gets an additional ₹30,750 per quarter. Between POMIS and SCSS, she has a predictable income stream of roughly ₹19,500 per month without ever touching the principal — exactly the kind of safe, boring, income-first setup retirement is about.

The Tax Part: No Special Favours

POMIS interest is fully taxable under "Income from Other Sources" at your slab rate. No TDS is deducted at source — the Post Office doesn't withhold — but you're legally required to declare and pay tax when filing returns. There's no 80C deduction for the principal, either. So in the old tax regime at the 20% slab, a 7.4% POMIS rate is effectively 5.92% post-tax. For retirees often in lower slabs (or below the exemption threshold entirely), the effective rate stays closer to the headline.

POMIS does qualify for the Section 80TTB deduction for senior citizens — which allows up to ₹50,000 of interest income from deposits to be deducted — so a retired couple can often shield meaningful portions of their POMIS income via this route.

Premature Withdrawal Rules

POMIS is fairly strict about its 5-year term, but not brutal. Withdrawal is allowed after 1 year, and the penalty depends on timing: if you close between 1 and 3 years, 2% of the principal is deducted as a penalty; between 3 and 5 years, the penalty drops to 1%. Before 1 year, you cannot withdraw at all. On premature closure, you get back the principal minus the penalty, along with any accrued but unpaid interest up to the closure date.

Common Mistakes People Make With POMIS

• Depositing more than the individual limit. ₹9 lakh is the individual cap and ₹15 lakh is the joint cap. Depositing more won't be accepted, or the excess won't earn interest. Families often split deposits across multiple POMIS accounts (one in each spouse's name plus a joint one) to effectively expand the cap — that's allowed within the per-person limits.
• Not linking to a savings account. If the monthly interest has nowhere to land, it sits in the POMIS account earning nothing. Always link to a post office savings account or authorised bank account for direct credit.
• Treating POMIS as a growth product. The principal never compounds in POMIS. At 7.4% paid out, the final value is just your deposit back. If you want growth, this isn't the vehicle — use NSC or FD cumulative instead.
• Using POMIS for a short-term goal. The tenure is a fixed 5 years. Premature closure costs up to 2% of principal. Don't park money here if you might need it in 18 months.
• Forgetting to renew at maturity. POMIS doesn't auto-renew. At the end of 5 years, your principal returns to your linked account and just sits there earning savings-rate interest until you actively redeposit. Set a calendar reminder.
• Skipping the Section 80TTB claim. Senior citizens can shield up to ₹50,000 of interest income from tax. A startling number of retirees pay tax they didn't need to simply because they or their accountant missed this.

Key POMIS Terms You'll Keep Seeing

• Tenure: Fixed at 5 years. No shorter, no longer.
• Monthly payout: The interest amount credited to your linked savings account every month.
• Individual limit: ₹9 lakh maximum for a single-holder POMIS account.
• Joint limit: ₹15 lakh maximum for joint accounts with up to 3 holders.
• Premature closure penalty: 2% of principal if closed between 1–3 years, 1% if closed between 3–5 years, not allowed before 1 year.
• Section 80TTB: Senior citizen deduction allowing up to ₹50,000 of deposit interest to be tax-free per year.
• Linked savings account: The post office or bank savings account to which monthly interest is credited.

How to Use Our POMIS Calculator in 30 Seconds

1. Enter your deposit amount. Anywhere between ₹1,000 and ₹9 lakh (individual) or ₹15 lakh (joint).
2. Keep the interest rate at 7.4% — the current rate as of 2026. Adjust if the government revises.
3. Tenure is fixed at 5 years — you don't need to enter anything.
4. Read the three numbers: Monthly Income (what you'll receive every month), Total Interest (over 5 years), and Maturity Value (your principal, returned intact).
5. Compare scenarios: running ₹5 lakh vs ₹9 lakh shows exactly how the monthly cheque scales with the deposit.

Frequently Asked Questions

Is POMIS interest taxable?

Yes, fully, at your slab rate under "Income from Other Sources." However, no TDS is deducted — you're responsible for declaring it at return filing time. Senior citizens can shield up to ₹50,000 of such interest under Section 80TTB, which makes POMIS substantially more tax-efficient for the 60+ crowd than it appears at first glance.

POMIS vs SCSS — which is better for retirees?

SCSS pays a higher rate (around 8.2% vs POMIS's 7.4%) but is restricted to people aged 60+ (or 55+ for early retirees with conditions). SCSS also has a higher individual cap of ₹30 lakh. POMIS has no age restriction and a 5-year tenure (SCSS is also 5 years, extendable by 3). Most retirees should max out SCSS first, then use POMIS as a second income stream. Younger investors who want monthly income can only use POMIS.

Can I open multiple POMIS accounts?

Yes, as long as the total deposited across all your accounts (including joint accounts you're part of) stays within the per-person limits. A couple could have one single account each (₹9 lakh × 2 = ₹18 lakh) plus a joint account (₹15 lakh) — but the joint account's amount is shared across holders, so the calculation gets nuanced. Most families run one joint and one or two single accounts.

What happens if I withdraw before maturity?

If you close before 1 year, you cannot withdraw at all. Between 1 and 3 years, 2% of the principal is deducted as penalty. Between 3 and 5 years, 1% of principal is deducted. You'll receive your principal minus the penalty and any accrued monthly interest up to the closure date. On maturity, you get the full principal back with no deductions.

Can NRIs open a POMIS account?

No. POMIS is strictly for Indian residents. If you become NRI during the tenure, you must close the account within the rules of NRI conversion. Your existing POMIS cannot continue under NRI status.

Is the monthly income guaranteed to remain the same for 5 years?

Yes. The rate applicable on the day you deposited is locked in for the entire 5-year tenure, regardless of any quarterly rate changes the government announces later. This is a genuine advantage over bank FD monthly income plans, which sometimes reset. If the rate drops next quarter, your POMIS keeps paying the higher rate you locked in.

Can I use the monthly POMIS income to pay a SIP or RD?

Absolutely — and it's actually a pretty elegant setup. Some retirees use their POMIS monthly income to fund a conservative hybrid or debt SIP, effectively converting a lump sum into a recurring investment stream without touching the principal. Others use it to fund a grandchild's SSY or RD. As long as you're not spending the interest on consumption, you're compounding indirectly.

The One Thing to Take Away

POMIS is built for one very specific job: turning a lump sum into a reliable monthly cheque with zero risk. Not for growth. Not for tax saving. Not for young accumulators. If that description matches what you actually need — usually because you or a parent is newly retired and wants predictable income without chasing returns — this is one of the best products in the country for that use case. Run your numbers on the POMIS Calculator, walk into the post office, and come home with a five-year paycheck arrangement.

Boring. Predictable. Exactly what a retirement income stream should be.