Post Office MIS: ₹15 lakh joint account rules, ₹9,250 monthly income and tax drag

Mint has detailed the rules for the Post Office Monthly Income Scheme, and we think the details matter more than the headline payout. A ₹15 lakh joint deposit at 7.4% can produce ₹9,250 a month, but only under specific joint-account, lock-in and tax conditions. (Source: Mint)

What happened

The Post Office MIS currently offers 7.4% annual interest paid monthly, and the rate at account opening remains fixed for the five-year tenure. The minimum deposit is ₹1,000, in multiples of ₹1,000. A single-holder account is capped at ₹9 lakh, while a joint account with up to three adults can hold up to ₹15 lakh. At 7.4%, a joint deposit of ₹15 lakh earns ₹1,11,000 a year, or ₹9,250 a month; over five years the total interest is ₹5.55 lakh and the principal is returned at maturity. Joint holders have equal shares, and each person’s combined share across all MIS accounts must stay within the ₹9 lakh individual limit. Premature closure is not allowed in the first year, after one year but before three years it attracts a 2% deduction from the deposit, and after three years but before maturity the deduction is 1%, with rules subject to government policy. Monthly interest is taxed at the investor’s income tax slab rate, MIS deposits do not qualify for Section 80C deduction, and unclaimed monthly interest does not earn additional interest. (Source: Mint)

Our analysis

We read this as an income product, not a capital appreciation tool. The monthly interest is paid out rather than compounding, so an investor who does not need the cash flow immediately cannot earn extra on the unclaimed interest. The ₹15 lakh limit works only through a joint account, but it is not a loophole: each holder’s equal share is still counted against the ₹9 lakh per-person ceiling, and splitting money across multiple accounts does not raise the cap. (Source: Mint)

The lock-in and penalties shape the real return. The principal cannot be touched in the first year, and early exit before three years reduces the deposited amount by 2%, falling to 1% before maturity. In our view, that makes the product suitable mainly for someone who can keep the principal untouched for the full five years and wants a predictable monthly inflow, rather than someone who may need liquidity or wants the principal to grow. (Source: Mint)

The tax treatment is another layer. Interest is added to income and taxed at the slab rate, with no Section 80C benefit, so the post-tax monthly income for a higher-slab investor can be noticeably lower than ₹9,250. Because the rate is fixed at opening, an investor also locks in today’s 7.4% for five years, which provides certainty but no participation if small savings rates rise later. (Source: Mint)

What this could mean for you

• Retirees and pensioners seeking a regular monthly inflow may find the ₹9,250 payout predictable, but they need to accept the first-year lock-in and later early-exit deductions. (Source: Mint)
• Conservative fixed-income savers get a fixed 7.4% rate with no equity exposure, but the interest is taxed at slab, so the post-tax amount can be lower than the headline. (Source: Mint)
• Joint account investors can deploy up to ₹15 lakh only if each holder’s share remains within the ₹9 lakh limit across all MIS accounts; multiple accounts do not increase the cap. (Source: Mint)
• Tax-sensitive investors should note there is no Section 80C deduction and unpaid interest does not earn more, so the scheme works as a cash-flow tool rather than a tax-saving or compounding option. (Source: Mint)

What to watch next

• Any government change to small savings interest rates or withdrawal penalty rules, since Mint notes these can change with policy.
• Future Budget changes to tax slabs or Section 80C treatment, which would alter the post-tax income from MIS interest. (Source: Mint)
• Investors who may need access to principal within five years, because early closure is barred in the first year.

Bottom line

In our read, the Post Office MIS is best understood as a simple monthly income product, not a growth or tax-saving instrument. The headline ₹9,250 monthly payout is real, but only after the joint-account condition, five-year lock-in and slab taxation are priced in. (Source: Mint)