Post Office Monthly Income Scheme (MIS) 2026: Interest Rate, Rules & Returns

The Post Office Monthly Income Scheme (MIS) is a government-backed savings scheme that pays a fixed monthly income on a lump-sum deposit. It is one of India's most popular low-risk options for retirees and anyone wanting predictable cash flow, currently paying 7.4% a year, disbursed every month.

Because it is operated by India Post and backed by the Government of India, the capital is effectively guaranteed, which is why MIS appeals to conservative savers who prioritise safety over high returns. The trade-off is a fixed five-year term and a cap on how much can be invested.

This guide explains how the Post Office MIS works in 2026: the current interest rate, exactly how much monthly income different deposits generate, the investment limits, the rules on tenure and early withdrawal, how the interest is taxed, and how to open an account.

What is the Post Office Monthly Income Scheme?

The MIS is a fixed-term deposit scheme that converts a one-time investment into a steady monthly payout for 5 years. The depositor places a lump sum, and India Post credits interest every month until maturity, when the original principal is returned in full.

It is designed for income, not growth: the monthly interest is paid out rather than reinvested, so the principal does not compound within the scheme. That makes it well suited to senior citizens, single-income households, and anyone needing a dependable monthly supplement.

As a government small-savings scheme, MIS carries sovereign backing, which is the core reason it remains a default choice for risk-averse savers despite market-linked products offering higher potential returns.

The scheme has run for decades and is available at every one of India Post's 154,000-plus branches, giving it a reach no private bank matches. For households in tier-2, tier-3, and rural areas, the local post office is often the most accessible place to hold a government-guaranteed income product.

It is important to be clear about what MIS is not: it is not a growth or wealth-creation product. The principal stays flat in nominal terms and its real value is gradually eroded by inflation over the five years, so MIS works best as one income block within a broader plan rather than a sole investment.

MIS interest rate in 2026

The Post Office MIS interest rate is 7.4% per annum for the first quarter of FY 2026-27 (April-June 2026), paid monthly. The rate is set by the Ministry of Finance and reviewed every quarter, and it was left unchanged from the previous quarter.

"The rates of interest on various small savings schemes for the first quarter of FY 2026-27 remain unchanged from those notified for the fourth quarter of FY 2025-26." (Ministry of Finance small-savings rate notification, 2026, as reported by ClearTax.)

Because the rate is fixed at the time of deposit, an account opened today keeps 7.4% for its full five-year term even if later quarters change. That rate certainty is part of the scheme's appeal.

The current 7.4% sits near the upper end of the scheme's recent range; MIS has paid between roughly 6.6% and 7.4% over the past few years as the government adjusted small-savings rates with the broader interest-rate cycle. Locking in at the top of that band is more valuable when rates are expected to fall, which is one reason timing the deposit can matter.

How much monthly income does MIS pay?

Monthly income from MIS is simply the deposit multiplied by 7.4%, divided by 12. The table below shows the monthly payout at the current rate for common deposit amounts, including the two statutory maximums.

The figures are fixed for the full term, so a saver knows the exact monthly amount on day one. If the monthly interest is not withdrawn, it does not earn additional interest while sitting in the linked account, so it is best swept into a savings or recurring deposit.

A common strategy is to route the monthly MIS payout straight into a Post Office Recurring Deposit. That turns the otherwise idle interest into a compounding pot, effectively layering a second savings habit on top of the guaranteed income, without the saver having to act each month.

Investment limits and eligibility

MIS has firm investment ceilings: a maximum of ₹9 lakh in a single account and ₹15 lakh across a joint account, with a minimum of ₹1,000 and deposits in multiples of ₹1,000. These limits apply per individual across all MIS accounts combined.

Any resident Indian adult can open an account, individually or jointly with up to three holders, and a guardian can open one on behalf of a minor. A minor aged 10 or above can operate their own account within the rules.

The joint-account limit is the key planning lever: a couple can together hold up to ₹15 lakh in one joint MIS, generating ₹9,250 a month at the current rate.

Where a household has more than ₹15 lakh to deploy, the surplus has to go elsewhere, because the MIS ceiling is per individual across all accounts and cannot be exceeded by opening multiple accounts. This is why MIS is usually paired with other schemes rather than used alone for large sums.

Each joint holder is treated as having an equal share of the investment for limit purposes. Two individuals therefore use up ₹7.5 lakh each of their personal MIS capacity in a ₹15 lakh joint account, which is worth noting for anyone planning several accounts.

Tenure, premature withdrawal, and transfer rules

The MIS term is 5 years, and the account can be closed early only after the first year, with a penalty. Closing between 1 and 3 years deducts 2% of the principal; closing between 3 and 5 years deducts 1%.

No premature withdrawal is allowed in the first 12 months. On completing five years, the full principal is returned and the account can be reopened with a fresh deposit at the prevailing rate - which may differ from the original 7.4%, since rates reset quarterly.

In the event of the account holder's death before maturity, the account is closed and the principal returned to the nominee or legal heir, with interest paid up to the preceding month. Nominating a beneficiary at opening is therefore strongly advisable and avoids later disputes.

MIS accounts are portable: they can be transferred between post offices anywhere in India at no cost, which matters for savers who relocate. The monthly interest can also be auto-credited to a linked post office savings account.

How MIS interest is taxed

MIS interest is fully taxable as "income from other sources" and added to the depositor's total income at their slab rate. The scheme offers no Section 80C deduction on the amount invested, unlike PPF or NSC.

There is, however, no TDS (tax deducted at source) on MIS interest, so the full monthly amount is paid out and the depositor is responsible for declaring it. Tax treatment depends on individual circumstances, so the precise impact varies from person to person.

For a retiree in a low or nil tax bracket, the absence of 80C benefit matters little and the full 7.4% is effectively kept. For someone in the 30% slab, the post-tax return is materially lower, which is why higher earners often weigh MIS against tax-efficient alternatives rather than treating the headline rate as the real return.

MIS compared with other monthly-income options

Among guaranteed options, MIS sits in the middle on rate but high on simplicity and safety. The Senior Citizen Savings Scheme pays more at 8.2% but is limited to those aged 60+, while a bank monthly-income FD's rate varies by bank and is not government-backed in the same way.

For savers who qualify, combining SCSS (for the higher rate) with MIS (for additional capacity beyond the SCSS limit) is a common way to maximise guaranteed monthly income, as set out in IndiaPost's guide to the Monthly Income Scheme for senior citizens. The right mix depends on age, total capital, and tax position.

Against bank fixed deposits, MIS trades a little flexibility for certainty: bank FD rates move with the market and can be higher or lower, while MIS locks 7.4% for five years with government backing. Savers who value a guaranteed, unchanging monthly figure over chasing the top rate tend to prefer MIS, while those comfortable shopping rates may split capital across both.

How to open a Post Office MIS account

Opening an MIS account takes a single visit to any post office with three standard documents: a completed account-opening form, KYC proof (Aadhaar and PAN), and a passport-size photograph. An existing post office savings account makes linking the monthly payout easier, as set out in IndiaPost's guide to how to open a Post Office savings scheme.

The deposit can be made by cash or cheque, and the account is activated once the deposit clears. India Post is also expanding digital access through India Post Payments Bank, though MIS opening is still primarily a branch process.

At opening it is worth completing three small steps that save trouble later: nominating a beneficiary, linking a post office savings account for the monthly credit, and setting up an automatic sweep of that interest into a recurring deposit. Together these turn MIS from a passive payout into an organised income-and-savings routine.

"The Monthly Income Scheme account can be opened at any departmental post office, with interest payable on completion of a month from the date of opening." (India Post, Banking Services.)

Who the MIS suits best

The MIS fits a saver with a lump sum who wants a fixed, guaranteed monthly income without touching the capital, above all a retiree or a single-income household. It suits less well someone seeking growth, since the principal does not compound and its real value erodes with inflation over the term.

For that reason, MIS works best as one income block within a wider plan, paired with growth schemes like PPF, rather than as a sole investment. Matching it to a genuine need for steady monthly cash is what makes it valuable.

Why MIS remains popular with retirees

MIS endures because it answers a retiree's central need so directly: a known, government-guaranteed amount arriving every single month, with the capital safe and returned in full at the end. There is no market risk, no rate surprise during the term, and no complexity to manage.

That predictability, reachable from the nearest post office, is worth more to many retirees than a slightly higher but uncertain return elsewhere. It is why MIS, often paired with SCSS, sits at the heart of so many retirement-income plans across India, and for a saver who wants steady cash above all, it remains a natural first choice.

Methodology

This guide uses the Post Office MIS interest rate of 7.4% notified for Q1 FY 2026-27 and the scheme rules published by India Post. Figures are drawn from India Post's banking-services pages and the Ministry of Finance small-savings rate notification, with monthly-income examples calculated directly from the stated rate.

Small-savings rates are revised every quarter and scheme limits can change, so current figures should be confirmed on India Post's official site before investing. This article is general information, not financial or tax advice; readers should consult a qualified adviser for decisions specific to their situation.

Key takeaways

• The Post Office MIS pays 7.4% a year for FY2026-27 Q1, disbursed monthly over a fixed 5-year term, with capital returned at maturity.
• A ₹9 lakh single account pays ₹5,550/month; a ₹15 lakh joint account pays ₹9,250/month, fixed for the full term.
• Limits are ₹9 lakh (single) and ₹15 lakh (joint); minimum ₹1,000 in multiples of ₹1,000.
• Early closure is allowed after one year with a 1-2% penalty; accounts transfer free between post offices.
• Routing the payout into an RD turns idle interest into a compounding second savings pot.
• Interest is fully taxable with no 80C benefit, but no TDS is deducted - rates are set quarterly, so confirm before investing.