Mahila Samman Savings Certificate: Earn 7.5% On Rs 1,000-2,00,000; Eligibilty, Tax Benefits, How To Apply!

Mahila Samman Savings Certificate is a newly added small saving scheme by the Indian government in 2023. The scheme aims to provide higher interest rates on small investment values starting from as low as Rs 1,000 to a maximum of Rs 2,00,000. That being said, the scheme is meant for women to help them build a great future. It has tax benefits with no age bar for Indian residential women.

Here are the key details of the scheme:

Eligibility: Any resident Indian woman can open a Mahila Samman Savings account at banks or Post Offices. There is no age limit for investing in this account. However, in the case of minors, accounts can be opened by their appointed guardian.

Deposits Limit: The minimum investment amount is Rs 1,000 and the maximum investment amount is Rs 2 lakh. A time gap of three months shall be maintained between the existing account and the opening of other accounts.

Interest Rates: Depositors can earn up to 7.5% interest rate per annum. Interest will be compounded quarterly credited in the account and paid at the time of closure of the account. Account opened or deposit made in contravention of rules will be eligible for interest @ PO Savings Account.

Withdrawal Criteria: A 40% withdrawal of the eligible balance can be taken after one year from the date of account opening.

Premature Closure: This is allowed during the death of an account holder, or on extremely compassionate grounds (i) Life-threatening decease of the account holder or (ii) death of the guardian on production of relevant documents. It needs to be noted that scheme interest will be paid on the principal amount. Further, premature closure is allowed after six months of account opening without mentioning any reason, however, the interest rate will be less by 2% which will come to around 5.5%.

Maturity: The scheme has a tenure of two years. Accounts can be opened till March 31, 2025.

How to open the account:

Submit the Account Opening Form, KYC Document (Aadhaar and PAN card), KYC form for the new account holders, and Pay-in-Slip along with the deposit amount/cheque at the nearest post office or bank.

Tax Benefits: All earnings under the Mahila Samman Savings Certificate will be taxable as per existing income tax provisions. However, TDS (Tax Deducted at Source) will not be deducted under the scheme. As per the guidelines, TDS is applicable on interest earned up to Rs 40,000 for the general category and Rs 50,000 for senior citizens. But since, the maximum limit is Rs 2 lakh, the interest earned will not exceed Rs 40,000 and hence there will be no TDS.

It will be keenly watched if the government extends the deadline or any other reforms for investing in Mahila saving schemes ahead of the Lok Sabha elections.

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