Put your Post Office MIS income into a recurring deposit every month and see how much more you have at maturity than with MIS alone.
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The Post Office Monthly Income Scheme (MIS) pays simple interest — 7.4% a year for 1 Oct 2026 – 31 Dec 2026 — into your savings account every month, for 5 years. If you don’t need that money to live on, it sits in a savings account earning very little.
The MIS + RD plan fixes that: every month the MIS payout goes into a recurring deposit (RD) of the same length. The RD compounds quarterly, so the interest you were paid starts earning interest of its own. At the end you get the MIS deposit back in full plus the RD’s maturity value.
The RD always runs for the MIS term, 5 years (60 instalments), because each instalment comes from one MIS payout.
Each row puts the whole MIS payout, at the official 7.4%, into a 5-year RD at 7% compounded quarterly — an illustrative RD rate, not any bank’s. The last column is what the RD adds over spending the income.
| MIS deposit | Monthly income | RD maturity | Total at maturity | Extra from the RD |
|---|---|---|---|---|
| Single account (₹1,00,000) | ₹617 | ₹44,359 | ₹1,44,359 | ₹7,359 |
| Single account (₹5,00,000) | ₹3,083 | ₹2,21,793 | ₹7,21,793 | ₹36,793 |
| Single account, at the limit (₹9,00,000) | ₹5,550 | ₹3,99,227 | ₹12,99,227 | ₹66,227 |
| Joint account, at the limit (₹15,00,000) | ₹9,250 | ₹6,65,378 | ₹21,65,378 | ₹1,10,378 |
The extra grows in step with the deposit: the RD interest is always the same share of the MIS income paid into it, so a bigger deposit simply means a bigger RD.
Take the single-account limit of ₹9,00,000 at 7.4%: the MIS pays ₹5,550 every month for 5 years. Paid in full into a Post Office RD at 6.7%, those 60 instalments grow to ₹3,96,080.
At maturity you have ₹12,96,080: the deposit back plus the RD. Spend the income as it comes and you end with ₹12,33,000. The RD adds ₹63,080 and lifts the effective yearly return from 6.5% to 7.57%.
To size a standalone RD, use the RD calculator; to see the MIS payout on its own, use the Post Office MIS calculator.
MIS interest is simple: 7.4% a year on the deposit, and nothing more. Spread over 5 years that is a lower compound yearly return than the headline rate, because the interest never earns anything itself.
Paying it into an RD gives that interest quarterly compounding for the rest of the term. The calculator shows both effective yearly returns side by side, so you can see what the RD is really worth.
If you don’t need monthly income at all, compare the plan with options that compound from day one, such as a cumulative deposit in the FD calculator:
| MIS + RD | MIS alone | Cumulative FD / Time Deposit | |
|---|---|---|---|
| Monthly income | Optional: keep part of it | Yes, all of it | No |
| Interest compounds | The income does, inside the RD | No | Yes, on the whole deposit |
| Flexibility | Stop paying into the RD and take the income any time | Income only | Locked until maturity |
| Effort | Two accounts and a standing instruction | One account | One account |
Both are taxable as “income from other sources” at your slab rate: MIS interest in the year it is paid, RD interest in the year it accrues, even though you receive it at maturity. Neither deposit gets a deduction. This calculator shows figures before tax.
At today’s rates, about 7.57% a year compounded, against 6.5% for MIS alone.
The extra is exactly the RD’s interest. Change the deposit, account type or RD in the calculator to see your own figures.
Give the post office a standing instruction, or set up an auto-debit at your bank.
Your MIS pays interest every month; instead of spending it, you pay it into a recurring deposit.
No. The RD can be at any bank or the Post Office.
Pick the bank in the calculator to use its current RD rate for 5 years.
Because each instalment comes from one MIS payout.
Yes. Switch on “Send only part of the income?” and set the instalment.
The single yearly rate that, compounded over 5 years, turns your MIS deposit into the plan’s total at maturity.
It lets you compare the plan fairly with an FD or another compounding deposit.
About a month after the MIS.
Not always — it depends on the rates.
Yes, both are taxed at your slab rate as “income from other sources”.
All figures here are before tax.
The MIS pays simple interest every month: deposit × MIS rate ÷ 12, for 60 months, and returns the deposit at maturity.
Each payout — or the smaller instalment you choose — goes into an RD for the same 60 months. The RD is worked out as Indian banks and the Post Office do: each instalment compounds quarterly for the months it stays in. In bank mode the RD rate is the bank’s published rate for the tenure slab nearest 60 months.
MIS monthly income
D × m ÷ 12
RD maturity
Σ P × (1 + r ÷ 4) ^ (4 × k ÷ 12), for k = 1 … n
Total at maturity
D + RD maturity + (D × m ÷ 12 − P) × n
Effective yearly return
(Total ÷ D) ^ (1 ÷ years) − 1
SIPCafe's calculators and guides are for education and planning only and are not investment, tax or legal advice. Results are estimates based on the assumptions you enter; actual returns vary and are not guaranteed. Consider speaking with a qualified financial adviser before making investment decisions. SIPCafe is not a registered investment adviser and does not recommend any specific security, fund or scheme. All investments carry market risk; read a fund's or scheme's official documents carefully before investing.
Rates come from the latest official notification or the bank's own rate page, as shown on this page. The government revises small savings rates every quarter and banks can change theirs at any time, so confirm the current rate with the Post Office or your bank before you invest.
Put your Post Office MIS interest into an RD and ₹9 lakh grows to ₹12.96 lakh in 5 years, ₹63,080 more than MIS alone. How the combo works and when an FD beats it.