If you have a lump sum and want regular monthly income without any market risk, two options come up immediately: the Post Office Monthly Income Scheme (MIS) and a Bank or Post Office Fixed Deposit (FD). Both are government-backed or bank-guaranteed, both offer predictable income, and both are popular with retirees and conservative investors. But they work quite differently. This guide compares them head-to-head with real numbers and examples so you can decide which is right for your situation.
What is Post Office MIS?
Post Office MIS is a savings scheme from India Post where you deposit a lump sum and receive a fixed interest payout every single month. The current interest rate is 7.4% per annum (Q1 FY2025-26, set by the Government of India and revised quarterly). The tenure is fixed at 5 years, after which you get your full principal back. You can invest up to Rs 9 lakh in a single account or Rs 15 lakh in a joint account.
The key feature of MIS is that it is designed specifically for monthly income. The interest is automatically credited to your linked savings account every month, making it one of the most hassle-free income options available.
Calculate your exact MIS monthly income: Post Office MIS Calculator (https://growcalculators.com/post-office-mis-calculator/)
What is a Fixed Deposit (FD)?
A Fixed Deposit is a savings instrument offered by banks and the post office where you deposit money for a fixed period at a predetermined interest rate. Unlike MIS, FDs offer flexibility — you can choose monthly, quarterly, half-yearly, or yearly payouts, or opt for a cumulative FD where interest is reinvested and paid out at maturity as a lump sum.
Bank FDs are insured by DICGC up to Rs 5 lakh per depositor per bank. Post Office FDs (also called Time Deposits) are backed by the Government of India with no upper insurance limit. Senior citizens typically get an additional 0.25% to 0.50% over regular FD rates at most banks.
Calculate Post Office FD returns: Post Office FD Calculator (https://growcalculators.com/post-office-fd-calculator/)
Post Office MIS vs Fixed Deposit — Full Comparison
(Scroll right on mobile to see full table)
| Feature | Post Office MIS | Bank FD (Senior / Regular) |
| Interest Rate | 7.4% p.a. (govt. fixed) | 7.0–7.75% p.a. (varies by bank) |
| Payout Frequency | Monthly (mandatory) | Monthly / Quarterly / Yearly / Cumulative |
| Safety | Sovereign — Govt. of India | DICGC insured up to Rs 5 lakh |
| Tenure | Fixed — 5 years only | 7 days to 10 years (flexible) |
| Max Investment | Rs 9L (single) / Rs 15L (joint) | No upper limit |
| Premature Withdrawal | After 1 year (penalty applies) | Allowed with penalty (varies) |
| Interest Taxation | Fully taxable (as per slab) | Fully taxable; TDS if > Rs 40K/yr |
| TDS Deducted | No TDS deducted | Yes — 10% TDS (20% without PAN) |
| Nomination | Available | Available |
| Online Account | Offline (post office only) | Online + offline |
| Best For | Fixed monthly income, no TDS | Flexibility, higher corpus, no limit |
Monthly Income Comparison at Different Corpus Levels
Here is how much monthly income you get from MIS vs different FD options, investing the same amount (FD figures assume monthly interest payout option):
(Scroll right on mobile to see full table)
| Deposit | MIS @7.4% | SBI FD @7.25%* | Post Office FD @7.5% (5yr) | Senior Citizen FD @7.75% |
| Rs 2,00,000 | Rs 1,233/mo | Rs 1,208/mo | Rs 1,250/mo | Rs 1,292/mo |
| Rs 5,00,000 | Rs 3,083/mo | Rs 3,021/mo | Rs 3,125/mo | Rs 3,229/mo |
| Rs 9,00,000 | Rs 5,550/mo | Rs 5,438/mo | Rs 5,625/mo | Rs 5,813/mo |
| Rs 15,00,000 | Rs 9,250/mo | Rs 9,063/mo | Rs 9,375/mo | Rs 9,688/mo |
| Rs 25,00,000 | Not eligible | Rs 15,104/mo | Rs 15,625/mo | Rs 16,146/mo |
*SBI FD rate as of March 2026 for regular investors (5-year). Post Office FD 5-year rate: 7.5%. Senior Citizen FD rate varies by bank — 7.75% used as example. All monthly income figures calculated as: (Principal × Annual Rate) / 12.
Key finding: For amounts up to Rs 15 lakh, Post Office MIS gives slightly less monthly income than Post Office FD (7.4% vs 7.5%). But MIS has no TDS, fixed monthly credit, and sovereign safety — which makes it attractive for those who do not want the hassle of TDS compliance.
Tax Treatment: MIS vs FD — A Critical Difference
Both MIS and FD interest is fully taxable as per your income tax slab. There is no tax exemption on either. However, the way TDS is handled is very different:
- Post Office MIS: No TDS is deducted at source. You receive the full monthly interest in your account. You must declare it in your ITR and pay advance tax if total interest exceeds Rs 10,000 per quarter.
- Bank FD: TDS at 10% is deducted if total interest from a bank exceeds Rs 40,000 per year (Rs 50,000 for senior citizens). Without PAN, TDS is 20%. You can submit Form 15G (below 60) or Form 15H (senior citizens) to avoid TDS if your income is below the taxable limit.
Tax impact on Rs 9 lakh invested in Post Office MIS (30% slab):
| Tax Scenario (30% slab, Rs 9L invested) | Post Office MIS |
| Annual interest earned | Rs 66,600 |
| TDS deducted at source | NIL — no TDS on MIS |
| Tax payable (30% slab) | Rs 19,980 (to be paid in ITR) |
| Net income after tax | Rs 46,620/year = Rs 3,885/month |
Important: MIS interest is taxable even though no TDS is deducted. Many investors forget to declare it in their ITR, which can attract interest and penalties. Keep track of all MIS interest received annually.
Real Example 1: Meena (Age 60, Retired, Needs Monthly Income)
Meena has Rs 9 lakh saved and wants to generate monthly income. She is comparing Post Office MIS vs a 5-year Post Office FD (monthly payout option).
| Post Office MIS | Post Office FD 5yr | |
| Amount invested | Rs 9,00,000 | Rs 9,00,000 |
| Interest rate | 7.4% p.a. | 7.5% p.a. |
| Monthly income | Rs 5,550 | Rs 0 (lump sum at end) |
| Total interest (5yr) | Rs 3,33,000 | Rs 3,40,611 (quarterly compounding) |
| Maturity amount | Rs 9,00,000 | Rs 12,40,611 |
| Verdict | Better for monthly income need | Better for lump sum at end of 5 years |
Meena chooses MIS because she needs the money credited every month automatically. The FD earns slightly more interest over 5 years due to quarterly compounding, but without a monthly payout option easily accessible through the post office, MIS wins on convenience.
Real Example 2: Ramesh (Age 65, Senior Citizen, Larger Corpus)
Ramesh is 65 and has Rs 15 lakh to invest for regular income. He is comparing Post Office MIS (joint account with his wife) vs a senior citizen FD at a leading bank offering 7.75% p.a.
| Post Office MIS | Senior Citizen FD @7.75% | |
| Amount invested | Rs 15,00,000 | Rs 15,00,000 |
| Interest rate | 7.4% p.a. | 7.75% p.a. |
| Monthly income | Rs 9,250/mo | Rs 9,688/mo |
| TDS deducted | NIL | Yes (if interest > Rs 50K/yr for senior) |
| Deposit limit | Maxed out at Rs 15L | No limit — invest any amount |
| Verdict | No TDS advantage; capped at 15L | More income + no investment limit |
Ramesh has already maxed out MIS at Rs 15 lakh joint. He invests an additional Rs 10 lakh in a senior citizen FD at 7.75%, getting Rs 6,458/month more. His combined monthly income: Rs 9,250 (MIS) + Rs 6,458 (FD) = Rs 15,708 per month from Rs 25 lakh.
Plan your MIS + FD income combination: Post Office MIS Calculator (https://growcalculators.com/post-office-mis-calculator/) and
Post Office FD Calculator (https://growcalculators.com/post-office-fd-calculator/)
When Should You Choose Post Office MIS?
- You want automatic monthly credit to your savings account — zero effort
- You want to avoid TDS deduction at source (no Form 15G/H hassle)
- Your investable corpus is Rs 9 lakh (single) or Rs 15 lakh (joint) — within MIS limits
- You are a conservative investor who wants sovereign safety with no upper insurance limit
- You are not a senior citizen and regular bank FD rates are lower than MIS’s 7.4%
When Should You Choose Fixed Deposit?
- Your investable corpus exceeds Rs 15 lakh — FD has no upper investment limit
- You are a senior citizen — banks offer 7.5% to 8.0% which beats MIS’s 7.4%
- You want flexibility in tenure — FD can be booked for 1, 2, 3 or 5 years
- You prefer a cumulative FD where interest compounds and is received as lump sum at maturity
- You want to invest online without visiting a post office branch
Best Strategy: Combine MIS and FD
The smartest approach for most Indian retirees with a corpus above Rs 15 lakh is to max out MIS first (Rs 15 lakh joint) for guaranteed, no-TDS monthly income, then invest the balance in senior citizen FDs or Post Office FDs for additional income. This gives you the sovereign safety of MIS plus the flexibility and higher rates of FDs for the surplus amount.
For example: Rs 15 lakh in MIS (Rs 9,250/month) + Rs 10 lakh in Senior Citizen FD at 7.75% (Rs 6,458/month) = Rs 15,708/month total from Rs 25 lakh invested. Entirely government-backed and risk-free.
Related Calculators on GrowCalculators.com
- Post Office MIS Calculator — Calculate your exact monthly income from MIS at any investment amount
- Post Office FD Calculator — Calculate Post Office Time Deposit maturity amount and interest
- FD Calculator — Calculate bank FD returns for any tenure and interest rate
- SWP Calculator — See if a mutual fund SWP can generate more monthly income than MIS or FD
- PPF Calculator — Compare MIS with PPF for long-term tax-free savings
- Income Tax Calculator — Calculate your actual tax liability on MIS or FD interest income
Final Verdict
For amounts up to Rs 15 lakh where you want automatic monthly income, zero TDS hassle, and sovereign safety, Post Office MIS is hard to beat. For larger amounts, senior citizens, or those who want flexibility in tenure, bank FDs — especially senior citizen FDs — can offer marginally better returns and unlimited investment capacity. For most retirees, the ideal solution is both: max out MIS, then park the rest in FDs. Use our calculators to find the exact monthly income your corpus can generate.