Suppose the goal is a monthly income of about ₹3,67,700 (roughly 1.5× this scenario's ₹2,45,125) at the same 18.5% annual rate. Rearranging the formula to solve for principal (Principal = Target monthly income × 12 × 100 ÷ Rate), the corpus required is approximately ₹2,38,50,811 — useful when you are working backwards from a monthly expense budget to the deposit size needed to cover it.

India's government-backed Post Office Monthly Income Scheme is a specific, real product that this calculator's generic "monthly interest" model resembles in spirit. A few real POMIS rules worth knowing (always verify the current figures on the India Post website or at a post office before investing, since rates and limits are revised periodically):

• Investment limit: historically capped at ₹9,00,000 for a single account and ₹15,00,000 for a joint account — limits that have changed over time and may change again, so confirm the current cap before investing. Your entered principal of ₹1,59,00,000 is above the historical single-account limit, so a real POMIS deposit of this size would likely need to be split across a joint account or multiple family members' accounts.
• Tenure: a fixed 5-year term, with premature withdrawal allowed after 1 year subject to a deduction from the principal (typically a percentage penalty that varies by how early you exit).
• Payout: interest is credited monthly to a linked savings account rather than compounding within the scheme — matching the "flat monthly payout" model this calculator illustrates. Some investors set up an automatic sweep from the linked savings account to a recurring deposit, effectively creating a secondary compounding layer on top of the fixed monthly payout, though this adds complexity and is a personal choice rather than a feature of the scheme itself.
• Principal: returned in full at maturity (5 years), assuming no premature withdrawal.

Interest rates on schemes like POMIS, the Senior Citizen Savings Scheme, and other small savings instruments are not fixed forever — the government reviews and revises them every quarter, broadly linking them to the yields on comparable government bonds. This means the rate you see quoted today may be different from the rate available when you actually walk into a post office or bank branch to open the account, and different again from the rate that applied when the scheme's terms were last discussed publicly. Always check the officially published current rate before finalising an investment decision, rather than relying on a figure you saw some time ago, in an advertisement, or in an older article.

This periodic revision is also why a calculator like this one asks you to input your own rate assumption rather than hardcoding a specific number — the underlying arithmetic (principal times rate divided by twelve, scaled by the number of months) does not change, but the rate itself is a moving target that depends on when you invest and which specific scheme you choose. Bookmark the official announcement page for whichever scheme you use so you can re-check the rate each quarter before the next investment decision.

It is easy to conflate a monthly income scheme with a pension, since both deliver a regular monthly sum, but the underlying mechanics are quite different. A pension is typically an ongoing entitlement tied to years of service or contributions to a retirement fund, and depending on the scheme, it may continue for the rest of your life regardless of how long you live, sometimes with survivor benefits for a spouse. A monthly income scheme, by contrast, is simply interest paid out on a fixed deposit for a fixed tenure — once the tenure ends, the payouts stop unless you renew the deposit, and there is no inherent "for as long as you live" guarantee built into the product itself.

This distinction matters for retirement planning: a pension (or an annuity purchased specifically to mimic one) protects against the risk of outliving your money, while a monthly income scheme simply generates cash flow from a corpus you continue to own and eventually get back. Neither is strictly better — they solve different problems, and many retirees benefit from having both a pension-like guaranteed-for-life income floor and a separate monthly-income or SWP arrangement for additional cash flow, rather than relying on just one single instrument to cover every retirement need for the rest of their life.

• Principal: ₹1,59,00,000
• Annual rate: 18.5%
• Months: 24
• Illustrative monthly interest: ₹2,45,125
• Total interest (window): ₹58,83,000
• Total amount (principal + interest, illustrative): ₹2,17,83,000
• Estimated TDS at 10% (illustrative): ₹5,88,300
• Net interest after illustrative TDS: ₹52,94,700

1. Start with the principal available to deposit: ₹1,59,00,000.
2. Note the annual rate: 18.5%.
3. Convert to a monthly rate by dividing by 12: 18.5% ÷ 12 ≈ 1.542% per month.
4. Apply that monthly rate to the principal: ₹1,59,00,000 × 0.01542 ≈ ₹2,45,125 per month.
5. Multiply by the number of months to get cumulative interest: ₹2,45,125 × 24 ≈ ₹58,83,000.
6. Estimate TDS at an illustrative 10%: ₹58,83,000 × 10% ≈ ₹5,88,300, leaving a net of about ₹52,94,700 after this illustrative deduction.
7. Add the principal back (since it is typically returned in full at maturity in these schemes) to see the full picture: ₹1,59,00,000 principal, plus ₹58,83,000 gross interest paid out monthly along the way.

Different horizons (same P and R)

Different rates (same P and months)

Different principals (same R and months)

Interest from monthly income schemes, POMIS, and similar fixed-income products is added to your total income and taxed at your income-tax slab rate — there is no special flat rate or capital-gains treatment for this kind of interest. On the illustrative total interest of about ₹58,83,000 over 24 months here, an illustrative 10% TDS would work out to about ₹5,88,300, leaving roughly ₹52,94,700 net — though the exact TDS threshold, rate, and your final tax liability depend on your total income and the specific product's rules.

• TDS: banks and post offices may deduct TDS once interest crosses a threshold in a financial year, with a higher threshold typically available to senior citizens.
• Form 15G/15H: if your total income is below the taxable threshold, submitting Form 15G (or 15H for senior citizens) can help avoid TDS deduction, though the interest remains taxable if your income later crosses the threshold.
• Advance tax: if your total tax liability (including this interest) exceeds the advance tax threshold, quarterly instalments may be required to avoid interest charges under Sections 234B/234C.

• Budgeting on the gross monthly figure, not the net. The ₹2,45,125 shown here is pre-tax — your actual usable monthly cash flow is lower once tax (and any TDS) is accounted for.
• Ignoring inflation. A fixed monthly payout buys less every year as prices rise — factor in a step-up or supplement from other income sources for long retirement horizons.
• Assuming principal grows. This model (and real MIS-style products) typically keep principal flat and pay out interest separately — do not expect the principal itself to increase over the tenure.
• Overlooking premature withdrawal penalties. Real schemes like POMIS often penalise early exit — check the exact terms before assuming you can withdraw the principal early without a cost.
• Investing above statutory limits without checking. Products like POMIS have investment ceilings — a large lumpsum may need to be split across accounts, family members, or a mix of products.
• Relying on a monthly income scheme as the only source of retirement income. Without a complementary growth-oriented allocation, a purely fixed-income approach can struggle to keep pace with rising costs over a retirement that may last two to three decades.

A monthly income scheme is one of several ways to generate regular cash flow from a lumpsum. Here is how it broadly compares with two alternatives:

Retirees often combine two or three of these — a government scheme or FD for a guaranteed floor, and an SWP from a mutual fund for growth potential and comparatively better tax efficiency on the remainder. The right mix depends on how much of your monthly need must be guaranteed versus how much flexibility you have to absorb some variability in exchange for potentially better long-run outcomes and more favourable taxation.

• Retirees planning a monthly budget around interest income from a lumpsum, whether in a POMIS-style scheme, a non-cumulative FD, or a similar product.
• Anyone comparing monthly-payout products against growth-oriented alternatives like SWP, to see the trade-off between guaranteed income and market-linked flexibility.
• Family members splitting a large lumpsum across single and joint accounts to stay within statutory investment limits on schemes like POMIS.
• Anyone reverse-engineering the principal needed to generate a specific monthly income target at a given rate.
• Financial planners and advisors illustrating the mechanics of fixed-income products to clients before recommending a specific real-world scheme or combination of products.

₹1,59,00,000 at 18.5% for 24 months is projected to generate about ₹2,45,125 a month, or ₹58,83,000 in total interest over the period — before tax and before any TDS. Whether that income is enough depends on your monthly budget, your other income sources, and how much inflation erodes its purchasing power over time. Use the sensitivity tables above to see how principal, rate, and horizon each move the outcome, and compare this illustrative model against an actual scheme's rate, tenure, and investment limits — particularly if you are considering the government's Post Office Monthly Income Scheme — before committing a large sum.

As with any fixed-income planning exercise, treat this page as a starting point for building intuition rather than a final answer — the real decision should weigh your complete financial picture, including other income sources, health and liquidity needs, and how comfortable you are locking up a large sum of money for a multi-year term without easy access to it.

Figures are computed live from the principal, annual rate, and number of months you entered, using a flat monthly interest estimate (monthly interest ≈ Principal × Rate ÷ 100 ÷ 12) with principal held constant throughout. Sensitivity tables recompute the same formula at nearby horizon, rate, and principal values. TDS and POMIS limit figures are illustrative and based on rules that are periodically revised by the government — confirm current thresholds before making a real investment decision. Nothing here is investment or tax advice.