SCSS vs Post Office MIS: which is better for regular income?

The Senior Citizens Savings Scheme (SCSS) and the Post Office Monthly Income Scheme (POMIS) both take a lumpsum, pay interest at regular intervals and return the principal at the end of 5 years. Both are government schemes run through post offices and authorised banks, and the rate is fixed for the life of your deposit at the rate in force when you open it.

The differences are in who can open them, how much you can put in, how often they pay and how they are taxed. SCSS pays 8.2% a year, credited quarterly. POMIS pays 7.4% a year, credited monthly. Rates are reviewed by the government every quarter and apply to new deposits.

The table shows the interest each scheme pays at today’s rates. SCSS pays every quarter; the monthly figure is shown only to compare like with like. POMIS allows ₹9 lakh in a single account and ₹15 lakh in a joint account, while SCSS allows up to ₹30 lakh per individual.

• SCSS pays 0.8% more a year, which on ₹9 lakh is ₹7,200 a year, or ₹36,000 over 5 years.
• The full ₹30 lakh in SCSS pays ₹61,500 a quarter. Extended by 3 years, the total interest comes to ₹19,68,000 if the rate is unchanged.
• A couple aged 60 or more can each open an SCSS account, so a household can hold up to ₹60 lakh in SCSS, plus a joint POMIS account.

SCSS is meant for retirees. You must be 60 or older, though people who retire earlier under a voluntary or superannuation scheme, and retired defence personnel, may open an account within set conditions. Check the current rules with India Post before applying. POMIS has no age condition, so it also suits a younger spouse or anyone wanting monthly income.

Both schemes allow premature closure on set conditions, and both cost you money if you close early, either as a deduction from the principal or by recovering interest already paid. Neither is a good home for money you may need soon.

Interest from both schemes is fully taxable at your slab rate, in either regime. The SCSS deposit qualifies for the old regime investment deduction (formerly Section 80C) within the overall ₹1.5 lakh limit. There is no deposit deduction in the new regime, and none for POMIS in either regime.

SCSS is usually the better choice if you are 60 or older. It pays a higher rate, takes more money, and the quarterly payout is easy to plan around. Fill it first.

POMIS fits if you are not yet eligible for SCSS, if you need income every month rather than every quarter, or if you have already used the SCSS limit. Many retirees use both: SCSS for the bulk, and POMIS to smooth out the months between SCSS payouts.

Remember that both payouts are fixed in rupees for 5 years. They do not rise with inflation, and when the deposit matures you reinvest at whatever rate is then on offer. Retirees with a long horizon usually keep part of their savings in investments that can grow, so the regular income from these schemes is not the whole plan.

1. Work out the monthly income you need, and divide it by the payout per lakh at today's rates.
2. If you are 60 or older, put the first ₹30 lakh (per spouse) into SCSS.
3. Use POMIS for the next ₹9 lakh single or ₹15 lakh joint if you need more.
4. Compare a senior citizen FD for any balance; banks often add a premium for seniors, and you can choose the tenure.
5. Keep at least a year of expenses in a savings account or sweep FD, as neither scheme is meant to be broken early.