The newly launched Mahila Samman Saving Certificate Scheme, effective from April 1, 2023, provides women with a unique savings opportunity. Unlike traditional schemes, the taxation approach for this scheme takes an interesting twist.
Instead of deducting TDS (Tas Deducted at Source), the income earned from the investment is added to the account holder's total income, and taxation is applied based on their applicable tax slab. This change was communicated through a recent notification by the Central Board of Direct Taxes (CBDT).
As per the CBDT notification, if the interest received from investing in the Mahila Samman Savings Certificate does not exceed Rs 40,000 per year, no TDS needs to be paid. Assuming an annual interest rate of 7.5 percent, a maximum investment of Rs 2 lakh will generate an interest income of Rs 15,000 in the first year and Rs 32,000 in the second year. Since the interest income falls below the Rs 40,000 threshold, TDS is not applicable in this scenario.
It is important to note that investing in the Mahila Samman Savings Certificate does not provide any tax benefits under Section 80C of the Income Tax Act, 1961. Therefore, account holders cannot claim a tax exemption on their investments.
The Mahila Samman Saving Certificate Scheme was announced by Finance Minister Nirmala Sitharaman during the budget presentation. It offers women a 7.5 percent annual interest rate on their deposits for a two-year period. The scheme is exclusively designed for women, including minors whose accounts can be opened by their guardians. Accounts can be opened under this scheme until March 31, 2025, in the name of either a woman or a minor girl.
To open an account, a minimum deposit of Rs 1,000 is required, with a maximum deposit limit of Rs 2 lakh. Investors will receive 7.5 percent interest annually, credited to their accounts quarterly.
Upon maturity of the scheme after two years, account holders can apply for the amount through Form-2. Additionally, after completing one year in the scheme, account holders have the option to withdraw 40 percent of the deposited amount. For accounts opened for minors, guardians can withdraw the maturity amount by submitting Form-3.
