Post Office MIS + RD Combo: Returns on ₹9 Lakh, Explained

How the MIS + RD combo works

The Post Office Monthly Income Scheme (MIS) takes a one-time deposit and pays simple interest every month for 5 years: 7.4% a year for October–December 2026. That interest lands in your Post Office Savings Account and, if you don’t need it, sits there earning very little.

The combo puts it to work. You open a recurring deposit (RD) for the same 5 years, and each month’s MIS payout becomes that month’s RD instalment. The RD compounds quarterly. After 5 years you get two things back:

1. the MIS deposit, in full;
2. the RD’s maturity value: every payout you put in, plus the interest it earned.

What it pays on ₹9 lakh and ₹15 lakh

All figures use the official MIS rate of 7.4% and the Post Office RD rate of 6.7% (October–December 2026), with the whole payout going into the RD:

The extra is always about the same share of the income, so it grows in step with the deposit. On ₹1 lakh the RD adds ₹7,009.

Why the effective return goes up

MIS interest is simple. ₹9 lakh earns ₹66,600 a year, every year, and that interest never earns anything itself. Spread over 5 years, that works out to a compound return of only 6.50% a year, below the 7.4% headline rate.

The RD fixes the missing compounding. Each payout earns 6.7% compounded quarterly for the months it stays in the RD, which lifts the plan’s effective return to 7.57% a year. With a bank RD at 7.5% instead, the total would be ₹13,04,538 (7.71%).

MIS + RD vs a cumulative FD

If you don’t need monthly income at all, compare the combo with a deposit that compounds the whole amount from day one:

The FD ends slightly ahead because its compounding starts on the full ₹9 lakh, not on the income. The combo’s advantage is flexibility: if you need the income in year three, stop the RD and take the ₹5,550 a month from then on. With a cumulative FD, getting money out means breaking it.

Setting it up at the post office

1. Open the MIS linked to your Post Office Savings Account; the interest is credited there every month.
2. Open a 5-year RD at the same post office, and give a standing instruction to move the monthly MIS interest into it.
3. Choose a round instalment just below the payout, for example ₹5,500 against ₹5,550. An RD instalment is fixed once the account is open, and a short credit can make you miss an instalment.
4. Prefer a bank RD? Open it at the bank, then set its auto-debit a few days after the MIS credit date.

You can also send only part of the income. With ₹5,000 a month going into the RD, you keep ₹550 a month (₹33,000 over 5 years) and still end with ₹12,89,829.

Common mistakes

• Mismatched terms. A shorter RD ends while MIS income is still coming in. A longer one needs money from elsewhere once the MIS ends.
• An instalment above the payout. It leaves no margin, and any shortfall means a missed instalment.
• Assuming the RD rate tracks the MIS rate. They are set separately; compare a few banks before you open the RD.
• Forgetting tax. Both MIS and RD interest are taxed at your slab rate. The figures above are before tax.

If you are 60 or over, also look at the Senior Citizens’ Savings Scheme. It usually pays more than MIS, with interest every quarter.