The article is about how the Post Office Monthly Income Scheme (MIS) works and shows how to increase your overall return by using family limits, joint accounts and reinvestment in RD.
Tenure
MIS is a 5‑year government‑backed scheme that pays interest every month directly to a linked savings account or bank account.
Interest Rate
Fixed at 7.40% per annum, calculated monthly and credited every month.
Minimum Deposit
Minimum deposit is ₹1,000 and the maximum limit is ₹9 lakh per person in all MIS accounts. For joint accounts (applicable up to 3 adults), the limit is ₹15 lakh per account and the share is equal: for 2 holders it is 1/2 each i.e., ₹7.5 lakh each, for 3 holders it is 1/3 each i.e.,₹5 lakh each.
Note:
At maturity after 5 years, your full principal is returned, and there is no extension facility but you must open a fresh MIS if you want to continue.
Who can open this account?
Any resident Indian with an age above 18 can open MIS in single or joint mode and minors above 10 can open in their own name, and below 10 through a guardian.
Premature closure and post‑maturity rules
No closure is allowed in the first year but if you close after 1 years and within 3 years then 2% of principal is deducted as penalty, closure between 3-5 years, 1% of principal is deducted.
After 5 years, if you forget to close the MIS, the amount just earns savings‑account type interest, so therefore the advice is you must try to close at maturity and reinvest elsewhere such as FD, RD, mutual funds, etc.
Monthly MIS Interest Upto Rs. 5,550
For example:
A family has 4 members and can use separate single accounts for each family members and from ₹36 lakh MIS at 7.4%, the family will be able to ₹22,200 per month.
| Person | Account Type | Investment | Monthly Interest |
| Husband | Single MIS | 9,00,000 | 5,550 |
| Wife | Single MIS | 9,00,000 | 5,550 |
| Minor Girl age above 15 years | Minor MIS (own name) | 9,00,000 | 5,550 |
| Minor boy age above 5 years | Guardian on behalf of Minor MIS | 9,00,000 | 5,550 |
| Total | 36,00,000 | 22,200 |
To exceed 7.40%, you can also redirect monthly MIS interest into Post Office Recurring Deposit at 6.70%. Over 5 years, this re-investment creates extra interest when added to the original MIS interest.
Tax Saving Tips
TDS is deducted on MIS interest.
Interest is taxable under "Income from other sources". There is no benefit under section 80C but seniors can get Section 80TTB deduction up to Rs. 50,000 if select old regime. TDS is deducted 10% if amount is more than Rs.50,000 (non-senior) or more than ₹1 lakh (senior) which can be avoid by submitting Form 15G/H.
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