MIS — Monthly Income Scheme: Who It Suits, Payout Mechanics and the Reinvestment Question
Your father is 68. His salary stopped two years ago, and every month he still asks the post office the same question: when is my turn to be paid. MIS is the one small savings scheme built to answer that every month. It is also the one where the answer stops after five years unless you do something about it.
What MIS actually is
MIS stands for Monthly Income Scheme, also called the Post Office Monthly Income Scheme (POMIS). It is a small savings scheme run through a post office. You put a lump sum in once, and the post office pays you an amount every month for five years. At the end of the five years you get your deposit amount back.
The interest rate for MIS is 7.4% for the quarter October to December 2026, notified on 30 September 2026. Small savings rates are reset every quarter by the Ministry of Finance, and the next revision is due on 31 December 2026. So 7.4% is the rate that applies right now, not a permanent rate.
Three things to hold on to. The deposit is locked for five years. The monthly payout is not tied to any market rate. It follows the notified rate, quarter by quarter. And the deposit amount comes back to you at the end, whatever the rate does in between.
How the monthly payout is calculated
The post office works out one year’s interest on your deposit, then divides that into twelve equal monthly payments.
Monthly payout = deposit × 7.4% ÷ 12
On ₹1,00,000:
- One year’s interest at 7.4% = ₹7,400
- ₹7,400 ÷ 12 = ₹616.67 before rounding
- Interest is rounded to the nearest rupee, 50 paisa or more going up, so the payout actually credited is ₹617 a month
- At maturity you get your ₹1,00,000 back
The rounding is paragraph 5(4) of the scheme, which is why the figure on your passbook is ₹617 and not ₹616.67.
What you get paid, by deposit amount
Every figure below is the payout at 7.4% for October–December 2026, for as long as that rate holds. When the rate is revised on 31 December 2026, these payouts change, including on accounts that are already running.
| Deposit | Interest ÷ 12 (before rounding) | Monthly payout credited | Over 60 months | Principal at maturity |
|---|---|---|---|---|
| ₹15,000 | ₹92.50 | ₹93 | ₹5,580 | ₹15,000 |
| ₹50,000 | ₹308.33 | ₹308 | ₹18,480 | ₹50,000 |
| ₹1,00,000 | ₹616.67 | ₹617 | ₹37,020 | ₹1,00,000 |
| ₹1,50,000 | ₹925.00 | ₹925 | ₹55,500 | ₹1,50,000 |
| ₹3,00,000 | ₹1,850.00 | ₹1,850 | ₹1,11,000 | ₹3,00,000 |
| ₹4,50,000 | ₹2,775.00 | ₹2,775 | ₹1,66,500 | ₹4,50,000 |
| ₹9,00,000 | ₹5,550.00 | ₹5,550 | ₹3,33,000 | ₹9,00,000 |
| ₹15,00,000 (joint) | ₹9,250.00 | ₹9,250 | ₹5,55,000 | ₹15,00,000 |
At the ceiling: a ₹9,00,000 deposit pays ₹5,550 a month, ₹66,600 a year. That is the number a real holder at the ceiling should check against their own passbook. It is also gross income, not take-home — set the tax aside and the monthly amount shrinks.
For operational detail (passbook entries, where the monthly credit shows up, passbook download and password) see our Passbook download and password guide. That page covers the mechanics properly; this one sticks to the scheme rules.
The deposit ceiling
The scheme, as amended by G.S.R. 239(E) dated 31 March 2023, sets the maximum deposit at ₹9,00,000 in a single account and ₹15,00,000 in a joint account (paragraph 4(2)).
Two related rules matter as much as the number. Under paragraph 3(2) an individual may open one or more than one MIS account. Several accounts do not raise the ceiling: the combined deposits across them still have to stay within the ₹9,00,000 single-account limit. And under paragraph 4(1) there is only one deposit in an account for the whole tenure. You put the money in once, at opening, and there is nothing further to top up in any later year.
Extending beyond five years
When the five years end, the account closes. Paragraph 7(1) of the 2019 scheme says the deposit and the interest accrued on it are paid after five years on an application in Form-3, and that is the end of it. There is no extension provision in the MIS scheme. No window, no form, no second five-year block.
So your monthly amount stops at month 60, and the honest options are two. Take the deposit back, or open a fresh MIS account on it. A fresh account is a new deposit, not an extension: it is governed by whatever rate is notified for the quarter you open it, and it starts a new five-year term. If the rate has moved since you opened the original, that matters.
It is worth knowing that the Post Office Time Deposit scheme does have an extension, at its paragraph 6, with a window of six, twelve, eighteen or eighteen months depending on the original tenure and a limit of two extensions after the first repayment date. That provision belongs to the Time Deposit and does not reach an MIS account. We have looked at the two side by side, tenure by tenure, on MIS vs Post Office Time Deposit.
Getting out early costs money
You can break the five-year lock, but not for free. Paragraph 6 of the 2019 scheme says the holder may be permitted to withdraw and close the account after one year, so the permission sits with the accounts office, and the post office deducts from the deposit:
- 2% of the deposit if the account is closed on or before three years
- 1% of the deposit if closed after three years
That is not a token charge. On a ₹9,00,000 deposit, closing in year two costs ₹18,000, and closing later but still before maturity costs ₹9,000. At ₹5,550 a month, ₹18,000 is more than three months of the entire payout thrown away, on top of losing the interest you would have earned for the rest of the term.
One more thing: this deduction is flat. There is no table and no different figure for older or newer accounts. The amounts either side of year three are the whole test.
The two real drawbacks
MIS gets recommended for one feature: money arrives every month. That is worth something. But two costs come attached to it.
First, the payout rate is thin. At 7.4% for October–December 2026, MIS sits below several places your money could have been. Senior Citizen Savings Scheme pays 8.2% this quarter, but quarterly rather than monthly. A good bank fixed deposit for five years is often in the same range as 7.4%, and it pays on maturity. The gap between MIS and SCSS is 0.8 percentage points — on ₹1,50,000 that is ₹1,200 a year, ₹100 a month. That is the price of getting paid monthly.
So is MIS better than SCSS for monthly income? If you need the money in your hand every month, it is MIS; if you want the largest income from the same deposit and can live with four payments a year, it is SCSS at the higher rate.
Second, the income stops at maturity, and the rate can move before that. On the due date the post office pays you the principal and the account closes. The monthly amount does not carry over. There is no ongoing stream unless you reinvest, and a family planning on ₹5,550 a month for twenty years has five years of it, not twenty.
The rate side of that second drawback deserves spelling out. The payout follows the rate notified for the quarter in which it is credited. A quarterly revision changes what an existing, already-open account receives, mid-term, without warning and without any action from you. So rate risk runs through all five years, not only at extension. A holder who assumed the number on their passbook was fixed for the tenure was wrong.
If you reinvest into a fresh MIS, you lock up for another five years at a rate someone else will notify. If you reinvest into SCSS, you get a better rate but only quarterly. There is no way to keep the monthly flow going without taking the deposit decision again every five years. That is a genuine design gap in the scheme, not an oversight in your planning.
What about tax
Two different things get mixed up here, so it is worth keeping them apart.
MIS interest is taxable. It is not exempt. It is income from other sources, added to your total income and taxed at your slab. TDS applies. Do not carry a “small savings means tax free” assumption across from PPF. PPF, SSY and NSC interest is exempt under section 11(1), Schedule II, Sl. No. 11 of the Income-tax Act, 2025, because those instruments are in the notified set. MIS is not in that set.
A limited deduction may be available. Section 153 of the Income-tax Act, 2025 allows a deduction for interest on deposits held with a post office, as defined in section 2(d) of the Post Office Act, 2023 — post offices are named in the section itself. For a senior citizen the ceiling is ₹50,000. For an individual below 60 the ceiling is ₹10,000, but the section limits that to interest on savings accounts excluding time deposits. The MIS scheme nowhere classifies its account either way. Paragraph 5(2) says only that interest is payable on completion of a month from the date of deposit, and 7(1) that the deposit and its interest are paid after five years. It is never described as a savings account and never described as a time deposit, so whether the ₹10,000 reaches an MIS payout is genuinely open, not settled in your favour or mine. A claim is also capped relief on taxable interest — it never turns the interest exempt.
If you are under 60 and this matters to your return, get the answer in writing. Rule 27 of the Government Savings Promotion General Rules, 2018 makes the Department of Economic Affairs the competent authority on questions of interpretation and its view is final and binding, so a ruling from them settles what reading the gazette cannot. Ask the post office which authority can give you one and keep it with your paperwork for the year you claim.
Who MIS suits, honestly
It fits if you want a monthly amount from a deposit you have already parked, you value knowing the rupee figure in advance more than the highest available rate, and you are comfortable treating the five-year block as money you will not need.
It does not fit if you need the money inside five years (breaking the lock before maturity costs 2% of the deposit in the first three years and 1% after that — see [Getting out early costs money](#getting-out-early-costs-money)), if you are comparing purely on yield, or if you are building a long income stream and have not decided what happens in year six.
What to do today
Pick one number. If a fixed monthly amount would genuinely change how you handle a monthly bill, write down the deposit that produces a payout you would find useful, then check that same money against one five-year bank FD and one SCSS account at today’s rates before you go. One afternoon of comparison is worth more than any article, including this one.
Key takeaways
- MIS pays deposit × 7.4% ÷ 12 every month for five years, rounded to the nearest rupee, then returns your principal. 7.4% applies October–December 2026, notified 30 September 2026; next revision 31 December 2026.
- Maximum ₹9,00,000 single, ₹15,00,000 joint (G.S.R. 239(E), 31.03.2023). One or more accounts per individual; only one deposit per account.
- A ₹9,00,000 deposit pays ₹5,550 a month at today’s rate.
- Payouts follow the notified quarterly rate, so a revision changes what an open account receives. Rate risk runs the full five years.
- MIS is 0.8 percentage points below SCSS, or ₹1,200 a year on ₹1,50,000. That is the cost of monthly payment.
- The monthly income stops at maturity unless you reinvest, and reinvesting means another five-year decision.
- MIS interest is taxable, never exempt. Section 153 gives capped relief: ₹50,000 for a senior citizen on any account including time deposits, which settles it for anyone 60 or over. Under 60 the cap is ₹10,000 on savings accounts, and the MIS scheme does not classify its account either way, so whether that reaches an MIS payout is open until the Department of Economic Affairs rules on it under rule 27.
- Closing before maturity may be permitted after one year, at the accounts office’s discretion, at a cost of 2% of the deposit in the first three years and 1% after that — ₹18,000 or ₹9,000 on a ₹9,00,000 deposit.
Frequently asked questions
What is the current MIS interest rate?
7.4% a year for the quarter October to December 2026, notified on 30 September 2026. The Ministry of Finance resets small savings rates every quarter and the next revision is due on 31 December 2026, so this is the rate that applies now, not a standing rate.
How is the MIS monthly payout calculated?
The post office works out a year’s interest on your deposit and divides it into twelve equal payments: deposit × 7.4% ÷ 12. On ₹1,00,000 that is ₹7,400 a year, ₹616.67 after the division, and ₹617 actually credited once interest is rounded to the nearest rupee, 50 paisa or more going up. That rounding is paragraph 5(4) of the scheme, which is why the figure on your passbook is ₹617.
What is the maximum deposit in an MIS account?
₹9,00,000 in a single account and ₹15,00,000 in a joint account, per paragraph 4(2) of the scheme as amended by G.S.R. 239(E) dated 31 March 2023. You may hold more than one account, but the ceiling applies across all of them for that individual. Only one deposit is allowed per account, for the whole tenure.
Can one person open more than one MIS account?
Yes. Paragraph 3(2) allows an individual to open one or more than one account, subject to the ceiling of maximum amount. The ₹9,00,000 limit is an aggregate across that individual’s accounts, not a per-account allowance: three accounts at ₹3 lakh each are fine, three accounts at ₹9 lakh each are not.
Does MIS pay monthly interest after five years?
No. On the due date the post office pays back the principal and the account closes. The monthly payout does not carry over, so the income stops unless you reinvest, either into a fresh MIS account for another five-year block at whatever rate is notified then, or into SCSS at a better rate but paid quarterly.
Can I extend an MIS account after five years?
No. The MIS scheme has no extension provision at all, so there is no window to apply in and no second block to take. Paragraph 7(1) closes the account after five years on an application in Form-3. Your monthly amount stops at month 60, and you either take the deposit back or open a fresh MIS account on it — which is a new deposit, at whatever rate is notified for the quarter you open it, with a new five-year term. The Post Office Time Deposit scheme does allow an extension, at its paragraph 6, but that provision does not reach an MIS account.
Is MIS interest tax free?
No. MIS interest is taxable as income from other sources and TDS applies. PPF, SSY and NSC interest is exempt under section 11(1), Schedule II, Sl. No. 11 of the Income-tax Act, 2025, because those instruments sit in the notified set. MIS does not.
Can I claim a deduction on MIS interest under section 153?
Only in part, and only for some holders. Section 153 of the Income-tax Act, 2025 allows a deduction for interest on deposits held with a post office, as defined in section 2(d) of the Post Office Act, 2023. A senior citizen’s ceiling is ₹50,000 and covers interest in any account, time deposits included, so a holder of 60 or over is not affected by any of this. For someone under 60 the ceiling is ₹10,000 and the section limits it to savings accounts, excluding time deposits. Where an MIS account sits is not settled by the scheme text, which never classifies it either way, so treat any claim under the ₹10,000 as open until you have it in writing from the Department of Economic Affairs under rule 27 of the General Rules. A deduction is capped relief on taxable interest; it never turns the interest exempt.
