Post Office Monthly Income Scheme vs Senior Citizen Savings Scheme: Which Gives Higher Income on ₹10 Lakh Investment in 5 Years?

Synopsis: This article discusses 2 different government backed retirement schemes, POMIS and SCSS. The article aims to help the readers choose an investment option best for them, it does this by showing how much returns one would get by investing Rs 10 lakh for 5 years.

An increasing concern facing the aging population of India is their ability to sustain themselves financially during their retirement years considering that prices have been on the rise. For that reason, the Government of India has come up with various small savings schemes through India Post as well as authorized banks in order to help them secure income and protect their capital from any losses. As prices continue to increase each year, planning for your retirement years is no longer a choice but a necessity.

The best government-approved schemes in India include POMIS and SCSS. While both schemes are risk-free and backed by a sovereign guarantee, they have certain differences in terms of interest rate, monthly withdrawal amount, tax benefits, etc. In this article, we compare these two schemes and answer a very important question: which scheme gives higher returns if ₹10,00,000 is invested for 5 years?

Post Office Monthly Income Scheme (POMIS)

The POMIS scheme is a savings plan backed by the government that can be availed of through India Post. The investor deposits a lump sum amount, which earns them a monthly interest payment, making this scheme among the most favored choices for people desiring a fixed income stream.

Key Features of POMIS

• Interest Rate: 7.4% per annum (reviewed quarterly).
• Duration: 5 years, and at the end of this period, the investment amount may be reinvested.
• Minimum/Maximum Investments: ₹1,000 minimum, and ₹9 lakh maximum for individual accounts and ₹15 lakh for joint accounts up to 3 members.
• Payment: Interest paid monthly directly to the individual Post Office Savings Account through ECS/CBS one month from the date of opening the account.
• Withdrawals Before Maturity: Allowed after 1 year, with the deduction of penalty.

Tax Benefits

POMIS cannot claim any deductions as per Section 80C of the Income Tax Act. Interest received is fully taxable as per the relevant slab rate. The TDS rules are the same as those for interest received from bank accounts.

Eligibility 

Any resident in India above the age of 10 can join this plan. Children under 10 years can subscribe to this plan with the help of a guardian. Non-Indian residents cannot avail themselves of this plan.

Also read: Form 121 Explained: The New Tax Relief Tool Every Senior Citizen Should Know in 2026

Senior Citizen Savings Scheme (SCSS)

What is SCSS?

SCSS was introduced in 2004 and is a retirement savings scheme that is sponsored by the government for the use of senior citizens only. The interest rate offered is very high amongst all small savings schemes and offers income every quarter. Accounts can be opened at post offices or any authorised bank.

Key Features of SCSS

• Interest Rate: 8.2% per year (quarterly review; effective for Q1 FY 2026-27).
• Tenure: 5 years, renewable for another 3 years upon maturity.
• Investment Range: Minimum investment ₹1,000; maximum investment ₹30 lakh (formerly ₹15 lakh as per Union Budget 2023).
• Maturity: Interest paid quarterly on April 1st, July 1st, October 1st, and January 1st.
• Joint Investment: Joint account allowed with spouse alone; total investment is credited to the first holder of the account.
• Partial Withdrawal: Possible after 1 year with a charge of 1.5% of the total deposit (within 2 years), or 1% thereafter.

Tax Benefits

The deductions allowed to the principal amount in SCSS fall under Section 80C of the Income Tax Act (point to be noted that deduction under new taxation regime will not be possible). The interest will be taxed on the slab rate applicable to the investor. According to the Union Budget 2025, the TDS will apply only if the interest from SCSS is more than ₹1 lakh.

Eligibility 

Persons residing in India, who are aged 60 years or above. Also, persons aged between 55-60 years, who have retired through Voluntary Retirement Scheme (VRS) or superannuation, can contribute to the scheme, if the account is opened within one month of receipt of retirement benefits. Some retired personnel from defence services above 50 years could also qualify.

POMIS vs SCSS

Income Comparison with Rs 10 lakhs invested for 5 years 

In a scenario where you invest ₹10 lakhs in either scheme over 5 years, SCSS will earn ₹40,000 more from the interest as compared to the interest that would be earned from POMIS due to the higher rate of interest. But SCSS earns ₹20,500 per quarter whereas POMIS earns ₹6,167 per month.

Conclusion

While both are good options for conservatives backed by the government, the two have different purposes. SCSS gives the benefit of a higher interest rate compared to POMIS (8.2% against 7.4%). At the same time, the main advantage of POMIS lies in the fact that it pays out monthly, and it can be availed by individuals irrespective of their age.

Both are not necessarily better than the other, and the choice depends on factors such as the age of the person (as the SCSS requires being an eligible senior citizen), tax benefit status (the benefit applies only in the old tax structure), frequency of payments desired (monthly or quarterly), and availability of funds (₹30 lakh in case of SCSS as compared to ₹9 lakh in POMIS).

Written by Shrikara