How to Calculate POMIS Monthly Income (Step by Step)

The Post Office Monthly Income Scheme, run by India Post, is one of the most trusted fixed-income options for retirees, homemakers and conservative savers across India. The biggest question people ask is refreshingly practical: how much money will actually land in my account each month? This guide walks through the exact calculation, step by step, using the current interest rate and real rupee examples you can follow along with.

The scheme is popular precisely because it is predictable. You deposit a lump sum once, and the post office pays you a fixed amount every single month for five years. There is no market risk, no fluctuation and no guesswork. Learning to calculate that monthly amount yourself helps you plan your household budget with confidence and lets you cross-check the figure the post office quotes at the counter.

Key takeaway: POMIS is a monthly-payout scheme, not a compounding one. Your principal never grows inside the scheme; instead, the interest it earns is handed to you every month, and the same principal amount is returned in full at maturity.

The POMIS Monthly Income Formula

The mathematics behind the scheme is deliberately simple, which is part of its appeal for first-time investors. Because interest is paid out monthly rather than reinvested, you only need one short formula. The calculation you will use is the post office monthly income formula:

Monthly Income = (Deposit Amount x Annual Interest Rate) / 12

The interest rate declared for the scheme is currently 7.4% per annum. This rate is reviewed every quarter by the Ministry of Finance, but here is the detail that matters most: whatever rate applies on the day you open your account stays locked for the entire five-year term. You are therefore fully protected even if the government reduces the rate in a later quarter, which makes budgeting around POMIS unusually reliable compared with floating-rate products.

Step-by-Step Calculation

Follow these four steps and you can work out your payout in under a minute, whether you use a pen and paper or a phone calculator.

1. Note your deposit amount. Decide how much you want to invest, staying within the permitted account limits described below.
2. Apply the annual rate. Multiply the deposit by 7.4% (that is, by 0.074) to find the total interest you will earn in one year.
3. Divide by twelve. Split that annual interest evenly across the twelve months to reveal your monthly payout.
4. Round sensibly. The post office pays in whole rupees, so your monthly figure will usually be a clean, easy-to-remember number.

If you would rather skip the arithmetic entirely, an online post office scheme calculator performs all three steps instantly and also displays your total interest across the full five years, which is handy when comparing options.

Three Worked Examples in Rupees

Let us apply the formula to three realistic deposits an Indian saver might actually choose, from a modest top-up to the maximum allowed.

Example 1 – Single account, 9 lakh: Multiply 9,00,000 by 0.074 to get 66,600 per year. Divide by 12 and you receive 5,550 rupees a month. Over the full five years you collect 3,33,000 in interest, and your original 9 lakh is returned at maturity.

Example 2 – Joint account, 15 lakh: Multiply 15,00,000 by 0.074 to get 1,11,000 per year, which is 9,250 rupees a month. This is the highest monthly income the scheme permits, and it is shared between the joint holders in whatever proportion they agree.

Example 3 – Modest deposit, 3 lakh: Multiply 3,00,000 by 0.074 to get 22,200 per year, or 1,850 rupees a month. This suits a saver who wants a small, dependable supplement to a pension or rental income without locking away a large sum.

How the Post Office Actually Pays You

Once your account is active, the interest for each month becomes payable on the completion of that month. You can collect it in cash at the post office, but the far more convenient option is to link the scheme to your post office savings account or a bank savings account so the payout is credited automatically. If you do not withdraw a particular month’s interest, note that the uncollected amount does not earn any additional interest – it simply waits for you. This is why many savers set up an auto-credit and then route the money into a recurring deposit to rebuild some compounding.

Benefits of Calculating It Yourself

Knowing how to compute the monthly income gives you genuine control over your retirement planning. You can compare POMIS against a bank fixed deposit or a recurring deposit before committing your money, and you can reverse-engineer the deposit needed to hit a target payout. If you want roughly 5,000 rupees a month, for instance, you now know you need close to 8.1 lakh. This kind of goal-based planning is far easier when you understand the formula rather than depending on someone else to quote a number, and it helps you spot errors if a figure ever looks wrong.

Challenges and Limitations

The scheme is not the right fit for every goal. The 7.4% rate, while stable, may trail inflation during high-inflation years, quietly reducing your real purchasing power over time. The interest is fully taxable and must be added to your income under the head income from other sources, which can nudge higher earners into a larger tax slab. There is also a firm ceiling of 9 lakh per person in a single account, so wealthy investors cannot rely on POMIS alone for a large monthly income. Finally, the money is locked for at least a year, and closing early attracts a penalty, so it should not hold funds you may need in an emergency.

Common Mistakes to Avoid

• Assuming the rate will change mid-term. Many savers expect the monthly payout to rise if rates climb later, but your rate is fixed at opening for the whole term.
• Ignoring the deposit ceiling. Depositing beyond 9 lakh in a single account is not permitted, and the excess is refunded without interest, delaying your plans.
• Treating the interest as tax-free. POMIS interest is taxable even though no TDS is deducted, and overlooking this leads to an unpleasant surprise at filing time.
• Expecting compounding. The scheme pays out monthly, so there is no in-built compounding unless you separately reinvest each payout elsewhere.
• Miscounting joint-account limits. The 15 lakh ceiling applies to the whole joint account, not to each holder individually.
• Letting interest sit uncollected. Uncollected monthly interest earns nothing extra, so always arrange an auto-credit.

Best Practices and Expert Recommendations

• Link the payout to a savings account. Ask the post office to auto-credit your monthly interest so you never miss a payment or leave money idle.
• Reinvest if you do not need the income. Routing each monthly payout into a recurring deposit rebuilds the compounding that POMIS itself does not offer.
• Use it as one pillar, not the whole roof. Combine the scheme with PPF or a pension so you balance liquidity, tax efficiency and long-term growth.
• Open jointly to raise the ceiling. A joint account with a spouse lets a couple invest up to 15 lakh and draw 9,250 rupees a month.
• Keep the maturity date on your calendar. Plan your next investment before the five years end so your capital does not sit idle after it is returned.
• Confirm the current rate before opening. Since the rate is set each quarter, verify the figure on the day you invest so your calculation matches reality.

Once you internalise the simple deposit-times-rate-over-twelve formula, POMIS becomes a transparent, easy-to-plan tool. Whether you are a retiree seeking steady cash flow or a family building a safe income stream, mastering the calculation puts you firmly in control of your money and your monthly budget.

If you want to go further, our companion guide explains the full POMIS calculation in detail with additional worked examples you can follow at your own pace.

Frequently Asked Questions

How is POMIS monthly income calculated?
Monthly income equals your deposit multiplied by the annual interest rate of 7.4% and then divided by 12. For a 9 lakh deposit this works out to 5,550 rupees every month, paid for the full five-year tenure.

What is the maximum monthly income from POMIS?
The maximum is currently 9,250 rupees a month, earned on the top joint-account limit of 15 lakh. A single account is capped at 9 lakh, which pays 5,550 rupees a month.

Is the POMIS interest rate fixed for five years?
Yes. Whatever rate applies on the day you open the account is locked for the entire five-year tenure, even if the government revises the rate in later quarters. This makes your monthly income fully predictable.

Is POMIS monthly income taxable in India?
Yes, the interest is fully taxable under income from other sources and must be declared in your return. The post office does not deduct TDS, so you are responsible for paying the tax yourself.

Can I withdraw my POMIS deposit before maturity?
No withdrawal is allowed in the first year. Between one and three years a 2% penalty applies, and between three and five years a 1% penalty applies on the principal that is returned to you.