What is the Post Office MIS Calculator?
A monthly income scheme converts a lump sum into a predictable stream of monthly interest payments. The principal stays intact and is returned at the end of the term; only the interest is paid out, which makes it a tool for generating income rather than growing capital.
This calculator estimates the interest such a deposit produces. It suits retirees and anyone needing regular income from savings without exposure to market movement.
What each input means
- Deposit amount
- The lump sum you invest, within the scheme's caps for single and joint accounts.
- Interest rate
- The rate in force when you open the account. It stays fixed for the whole term, even if the government changes the rate for new deposits.
- Tenure
- How long the deposit runs. Interest is paid out every month instead of being added to the balance, and the deposit itself comes back at maturity.
How this calculation works
Annual interest is calculated on the deposited amount and divided into monthly payments. Because the interest is paid out rather than retained, nothing compounds — the monthly figure stays the same for the entire term.
That is the deliberate trade. You gain predictable income and full return of principal at maturity, and you give up the growth that reinvested interest would have produced.
Formula: Monthly income = deposit × rate ÷ 12
Getting the most out of the result
- Use this for income you actually need to spend. If you do not need the income, a compounding product will build more wealth.
- Compare the rate against inflation — fixed monthly income loses purchasing power steadily over a multi-year term.
- Check the deposit ceiling, which is often lower for individual accounts than joint ones.
- Understand the penalty for premature closure before committing a large sum.
- Consider reinvesting the monthly payout elsewhere if you do not need it immediately, so it is not simply eroded.
Common mistakes to avoid
The main misunderstanding is expecting the deposit to grow. It does not — the principal returns unchanged in nominal terms at maturity, which after several years of inflation is worth noticeably less. Depositors also commit money they may need before the term ends and face a penalty on early closure. Others treat the monthly payout as tax-free when interest income is generally taxable, so the amount actually available to spend is less than the figure shown.
Frequently asked questions
Is the monthly payout fixed?
Yes. The rate is set when the account is opened and the monthly amount stays the same for the full term, which is precisely why the scheme suits people needing predictable income.
Do I get my principal back?
Yes, in full at maturity. Only the interest is paid out along the way, so the deposited amount is returned intact in nominal terms.
Is the interest taxable?
Interest income is generally taxable in most jurisdictions and may be subject to deduction at source. Factor this in when planning how much monthly income you will actually retain.
What if I need the money early?
Premature closure is usually permitted after a minimum holding period, with a penalty deducted from the principal. The penalty typically reduces the longer you have held the deposit.
Is there a maximum I can deposit?
Schemes of this type generally impose a ceiling, often higher for joint accounts than single ones. Check the current limit, as these are revised from time to time.
Can I reinvest the monthly interest?
Nothing prevents you from directing the payout into a recurring deposit or another investment. Doing so restores some of the compounding the scheme itself does not provide.
How does this compare with a fixed deposit?
A cumulative fixed deposit retains and compounds interest, producing a larger maturity value. A monthly income scheme pays interest out instead. Choose according to whether you need income now or growth later.