Post Office MIS Explained: Monthly Income Scheme vs FD

Guides · Loans & Schemes · Updated 2026

The Post Office Monthly Income Scheme (MIS) is a government‑backed investment that pays a fixed monthly interest to the account holder, making it popular among retirees and conservative investors. With a 5‑year lock‑in, a maximum deposit of ₹9 lakh (single) or ₹15 lakh (joint), and quarterly‑determined interest rates, MIS offers safety and predictable income. But how does it compare to a bank fixed deposit or the Senior Citizens Savings Scheme (SCSS)? This guide walks you through the details and provides a worked example for the maximum ₹9 lakh investment.

Why MIS Appeals to Regular‑Income Seekers

Unlike an FD where interest is usually paid out quarterly or cumulatively, MIS credits interest to your savings account every month, creating a steady income stream. The interest rate (currently 7.4% p.a. for Q4 FY 2025‑26) is reset every quarter but applies for the full tenure once you open the account. The interest is fully taxable as per your slab, and there's no TDS deducted. The scheme cannot be closed before 1 year, and premature closure between 1–5 years attracts a small penalty.

Max deposit: ₹9 lakh for an individual, ₹15 lakh for a joint account.
Tenure: 5 years, with an option to extend for another 5 years.
Interest paid monthly, directly to a linked Post Office savings account.
Comparable safety: backed by the Government of India.

Step-by-step: Calculate MIS Monthly Income

Open the Post Office MIS Calculator tool.
Enter the deposit amount (up to ₹9 lakh for single) and the prevailing MIS interest rate.
The tool instantly shows the monthly interest payout, the total interest over 5 years, and the maturity amount (principal returned).
You can compare side‑by‑side with a bank FD of the same amount and tenure, factoring in tax on interest.

💡 Tip: If you're a senior citizen, check the SCSS Calculator before committing to MIS. SCSS offers a higher interest rate (currently 8.2%) and qualifies for 80C deduction, but has a maximum limit of ₹30 lakh and a different payout structure.

Worked Example: ₹9 Lakh in MIS at 7.4%

      Deposit: ₹9,00,000

      Annual interest: 7.4% of ₹9,00,000 = ₹66,600

      Monthly payout: ₹66,600 / 12 = ₹5,550

      Total interest over 5 years: ₹3,33,000

      Maturity amount: ₹9,00,000 (principal returned in full, no capital appreciation).

      Compare with a 5‑year bank FD at 7%: Monthly payout would be lower (~₹5,250) unless you opt for cumulative FD, which pays no monthly income but compounds. MIS provides the highest monthly income among safe instruments for under‑₹9 lakh deposits.

If you're looking for a lump‑sum maturity rather than monthly income, use our FD Calculator to see how cumulative FDs compare with MIS in total returns after tax.

Frequently Asked Questions

Is MIS interest taxable?

Yes, the monthly interest is fully taxable at your slab rate. No TDS is deducted by the post office, but you must declare it under "Income from Other Sources."

Can I open multiple MIS accounts?

Yes, but the total deposit across all MIS accounts cannot exceed the limit (₹9 lakh individual, ₹15 lakh joint). The limit is per person, not per account.

What happens if I break the MIS before 5 years?

Between 1‑3 years, you get the principal back with a 2% penalty on the deposit. Between 3‑5 years, the penalty is 1%. No withdrawal is allowed before 1 year.

Can I reinvest the monthly interest automatically?

The interest is paid to a Post Office savings account. You can set up a standing instruction or manually reinvest it, but MIS itself doesn't offer a compounding option.

Is it free and private?

Yes — the tool runs entirely in your browser, free, with no sign‑up and nothing uploaded to a server.

Try the Post Office MIS Calculator