Post Office Monthly Income Scheme (MIS) Calculator

Min: ₹1,000, Max: ₹4,50,000 (₹9,00,000 for joint account)
Current MIS interest rate (revised quarterly)
Fixed tenure of 5 years

MIS Results

Monthly Income: ₹ 2,513
Total Interest Earned: ₹ 1,50,750
Maturity Amount: ₹ 4,50,000

Understanding Post Office Monthly Income Scheme (MIS)

What is Post Office Monthly Income Scheme?

The Post Office Monthly Income Scheme (POMIS) is a small savings investment scheme offered by India Post that provides regular monthly income to investors. It's designed for those seeking a secure investment option with a guaranteed monthly income, particularly suitable for retirees and individuals looking for stable returns with minimal risk.

Regular Income

Provides a steady monthly income stream, ideal for meeting regular expenses or supplementing other income sources.

Government Backed

Sovereign guaranteed investment, making it one of the safest options available in the market with virtually no risk.

Competitive Returns

Offers attractive interest rates compared to regular savings accounts, with interest paid monthly as income.

Key Highlights

  • Current interest rate: 6.7% per annum (paid monthly)
  • Fixed tenure of 5 years (60 months)
  • Minimum investment: ₹1,000
  • Maximum investment: ₹4,50,000 (single account) or ₹9,00,000 (joint account)
  • Premature withdrawal allowed after 1 year with penalty
  • TDS applicable on interest if it exceeds ₹40,000 per annum (₹50,000 for senior citizens)
6.7%

Current Interest Rate

5 Years

Tenure Period

₹4.5L

Maximum Investment

Monthly

Interest Payout

How Post Office MIS Works

1

Account Opening

Visit your nearest post office with KYC documents (ID proof, address proof, and passport-sized photographs). Fill out the application form, submit documents, and make the initial investment (minimum ₹1,000).

2

Investment

Decide on the investment amount (between ₹1,000 and ₹4,50,000 for a single account). Payment can be made through cash (up to ₹50,000), cheque, or demand draft. For joint accounts, the maximum limit is ₹9,00,000.

3

Monthly Interest

Interest is calculated at the current rate (6.7% per annum) and paid monthly. For example, on an investment of ₹4,50,000, you'll receive approximately ₹2,513 per month as interest.

4

Interest Collection

Interest can be received as cash from the post office, automatically credited to your savings account, or transferred to a recurring deposit account. This flexibility allows you to choose how you receive your monthly income.

5

Maturity

After completion of the 5-year term, the principal amount is returned to you. You can choose to withdraw the amount or reinvest in a new MIS account or other post office schemes.

Pros & Cons of Post Office MIS

Advantages

  • Regular Monthly Income: Provides a predictable monthly income stream, making it ideal for retirees or those needing regular cash flow.
  • Government Backed: Being a post office scheme, it's backed by the Government of India, ensuring high security and almost zero risk.
  • Decent Returns: Offers better interest rates (currently 6.7% p.a.) compared to savings accounts or many traditional bank products.
  • Low Minimum Investment: Accessible with just ₹1,000, making it available to a wide range of investors.
  • Joint Account Option: Allows joint holding, enabling couples or family members to maximize their investments (up to ₹9,00,000).
  • Premature Withdrawal: Allows withdrawal after one year, though with a small penalty, providing some liquidity.
  • Senior Citizen Friendly: Particularly beneficial for senior citizens looking for regular income with minimal risk.
  • Multiple Collection Options: Flexibility to receive interest as cash, bank transfer, or into a recurring deposit.

Disadvantages

  • Taxable Interest: The interest earned is fully taxable at your income tax slab rate.
  • Fixed Tenure: Fixed 5-year lock-in period, which might be limiting for some investment goals.
  • Inflation Risk: Returns may not always beat inflation, potentially eroding real purchasing power over time.
  • Investment Cap: Upper limit of ₹4,50,000 (individual) may be restrictive for high-net-worth individuals.
  • Penalty on Early Withdrawal: Premature closure before 5 years attracts a penalty (2% deduction from the principal).
  • TDS Applicability: TDS is deducted if annual interest exceeds ₹40,000 (₹50,000 for senior citizens).
  • No Reinvestment Option: Unlike FD or RD, there's no automatic reinvestment of monthly interest to compound returns.
  • No Loan Facility: Unlike PPF or FD, you cannot take a loan against the MIS investment.

MIS vs Other Investment Options

Feature Post Office MIS Bank Fixed Deposit Senior Citizen Savings Scheme (SCSS) Pradhan Mantri Vaya Vandana Yojana (PMVVY)
Current Interest Rate 6.7% p.a. 5-6.5% p.a. 8.2% p.a. 7.4% p.a.
Payout Frequency Monthly Monthly/Quarterly/Annually Quarterly Monthly/Quarterly/Annually
Minimum Investment ₹1,000 ₹1,000 (varies by bank) ₹1,000 Based on pension amount
Maximum Investment ₹4.5 lakhs (Individual)
₹9 lakhs (Joint)		 No upper limit ₹15 lakhs Amount giving max pension of ₹9,250/month
Lock-in Period 5 years Flexible (7 days to 10 years) 5 years (extendable by 3 years) 10 years
Tax Benefits None Only for Tax-Saver FD (80C) Section 80C benefits None
TDS Applicability Yes (if interest > ₹40,000/year) Yes (if interest > ₹40,000/year) Yes (if interest > ₹40,000/year) Yes (if interest > ₹40,000/year)
Premature Withdrawal After 1 year with penalty Anytime with interest penalty After 1 year with penalty After 1 year for specified conditions
Best For Regular income seekers, risk-averse investors Short to medium-term goals, flexibility Senior citizens looking for higher returns Senior citizens looking for pension

MIS vs Fixed Deposit: Key Differences

MIS Highlights
  • Fixed monthly income throughout the tenure
  • Better suited for regular income needs
  • Only available at post offices
  • Fixed 5-year tenure
FD Highlights
  • Flexible interest payout options
  • Available in various tenures (days to years)
  • Offered by banks and post offices
  • Option for automatic renewal

Tips for Investing in Post Office MIS

Open Joint Account

Consider opening a joint account with your spouse to double your investment limit from ₹4.5 lakhs to ₹9 lakhs, maximizing your monthly income.

Auto-Credit Option

Set up auto-credit of monthly interest to your savings account for convenience and to avoid missing any payments.

Laddering Strategy

Create multiple MIS accounts with staggered maturity dates to ensure a continuous stream of monthly income and regular renewal opportunities.

Reinvestment Plan

Consider setting up a separate RD account where you deposit your monthly MIS interest to create a compounding effect on your returns.

MIS Laddering Strategy Illustration

Instead of investing ₹4,50,000 in a single MIS account, consider dividing it into multiple accounts with different opening dates:

MIS Account Amount Opening Date Maturity Date Monthly Income
Account 1 ₹1,50,000 Jan 2023 Jan 2028 ₹838
Account 2 ₹1,50,000 Jan 2024 Jan 2029 ₹838
Account 3 ₹1,50,000 Jan 2025 Jan 2030 ₹838
Total Monthly Income: ₹2,514

Benefits: When Account 1 matures in Jan 2028, you can reinvest that amount in a new MIS account, potentially at a higher interest rate. This creates a cycle of reinvestment opportunities every year instead of having all your money mature at once.