Post Office Scheme : In the current economic climate, where market volatility and unpredictable returns make investments risky, government-backed savings schemes are gaining massive attention for their safety and assured returns. One such option is the Post Office Monthly Income Scheme (POMIS), known for its reliability and consistent returns. In this article, we’ll explore how a one-time investment of ₹5 lakh can earn you ₹2.24 lakh in returns, how the scheme works, and why it is becoming a popular choice among retirees, salaried individuals, and risk-averse investors.
Post Office Scheme : What is the Post Office Monthly Income Scheme (POMIS)?
The Post Office Monthly Income Scheme is a small savings scheme offered by India Post and backed by the Government of India. It is ideal for individuals seeking fixed monthly income without taking market risks.
Key features of POMIS:
- Safe and government-backed
- Fixed monthly income from interest
- 5-year investment term
- Can be opened individually or jointly
Premature withdrawal allowed under certain conditions
How Does the ₹5 Lakh Investment Plan Work?
When you deposit ₹5,00,000 under the Post Office Monthly Income Scheme, it earns a fixed interest every month. As per the current interest rate (7.4% per annum, compounded monthly), your investment earns ₹3,083 per month for 5 years.
Total earnings breakdown:
- Monthly income: ₹3,083
- Annual income: ₹3,083 x 12 = ₹36,996
- Total in 5 years: ₹36,996 x 5 = ₹1,84,980
- Total maturity amount: ₹5,00,000 (principal) + ₹1,84,980 (interest) = ₹6,84,980
Thus, total return = ₹1.84 lakh approx. If compounded or reinvested elsewhere, total benefits can go up to ₹2.24 lakh.
Post Office Monthly Income Scheme – Interest Rate & Return Table
| Investment Amount | Monthly Interest | Annual Interest | 5-Year Return | Maturity Amount |
|---|---|---|---|---|
| ₹1,00,000 | ₹617 | ₹7,404 | ₹37,020 | ₹1,37,020 |
| ₹2,00,000 | ₹1,233 | ₹14,796 | ₹73,980 | ₹2,73,980 |
| ₹3,00,000 | ₹1,850 | ₹22,200 | ₹1,11,000 | ₹4,11,000 |
| ₹4,00,000 | ₹2,467 | ₹29,604 | ₹1,48,020 | ₹5,48,020 |
| ₹5,00,000 | ₹3,083 | ₹36,996 | ₹1,84,980 | ₹6,84,980 |
| ₹7,50,000 (Joint) | ₹4,625 | ₹55,008 | ₹2,75,040 | ₹10,25,040 |
| ₹9,00,000 (Joint) | ₹5,550 | ₹66,600 | ₹3,33,000 | ₹12,33,000 |
Eligibility Criteria and Account Opening Process
Who can invest:
- Any Indian resident aged 10 years and above
- Minors can open accounts with a guardian
- Joint accounts allowed (up to 3 adults)
How to open an account:
- Visit the nearest post office
- Submit Form-A with KYC documents (ID proof, address proof, photographs)
- Deposit cheque/cash amount
Account gets activated within 1-2 working days
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Benefits of Investing in Post Office Monthly Income Scheme
- Assured monthly returns: Ideal for pensioners and homemakers
- Capital protection: Your principal is 100% secure
- No TDS: Unlike fixed deposits, interest earned is not subject to TDS
- Liquidity: Premature withdrawal is allowed after 1 year (with penalty)
- Transferability: You can transfer the account from one post office to another
Tax Implications on POMIS Returns
- Interest income is taxable as per individual tax slab
- No tax deduction under Section 80C for the principal amount
- No TDS is deducted by the post office
If the total income exceeds the taxable limit, the investor is required to declare the interest earnings while filing Income Tax Return (ITR).
Comparison: POMIS vs Other Safe Investment Options
| Scheme | Interest Rate | Lock-in Period | Monthly Payout | Capital Safety | TDS |
|---|---|---|---|---|---|
| POMIS | 7.4% | 5 Years | Yes | Yes | No |
| Bank FD (Senior) | 7.0%-7.5% | 5 Years | Yes (optional) | Yes | Yes |
| SCSS (Senior Scheme) | 8.2% | 5 Years | Yes | Yes | Yes |
| NSC | 7.7% | 5 Years | No (cumulative) | Yes | No |
Who Should Invest in This Scheme?
- Retirees looking for monthly income
- Homemakers and conservative investors
- Parents investing for children’s future
- Individuals avoiding equity or mutual funds
- Joint investors looking for higher limits
Expert Tip: Combine POMIS with a recurring deposit (RD) using monthly interest to build a larger corpus over time.
The Post Office Monthly Income Scheme offers a safe, simple, and government-guaranteed way to earn steady monthly returns. For those who are risk-averse and looking for a predictable income stream, especially retirees and homemakers, this scheme is an excellent option. A one-time deposit of ₹5 lakh can earn you around ₹2.24 lakh in total interest, giving peace of mind and financial stability over five years.
Interest rates are subject to change as per government notification. Always check the latest rates and consult with a financial advisor before making any investment decision.
What are the terms of the Post Office Scheme for a ₹5 Lakh deposit?
Get ₹2.24 Lakh return with full details.
