Over 22.5 lakh accounts have been opened under the Mahila Samman Saving Certificate Scheme (MSSCS) in the first nine months of the fiscal with a deposit of over ₹14,500 crore.

The scheme was announced in the last budget. “Mahila Samman Savings Certificate provides financial advantages to women and encourages them to take charge of their finances and make informed decisions”, said the Finance Ministry in a social media post highlighting delivery of budget promises. The scheme was notified on March 31 and made available through 1.6 lakh post offices from April 1.

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Data shows, Maharashtra circle leads in opening accounts under MSSCS with over 4.5 lakh accounts and deposits of over 2,800 crore followed by Tamil Nadu circle (around 3.5 lakh accounts, around ₹1,600 crore of deposits), Odisha circle (over 2.5 lakh accounts, over ₹1,000 crore of deposits), Karnataka circle (around 1.7 lakh accounts, around ₹1,200 crore of deposits) and Andhra Pradesh circle (over 1.3 crore accounts, over ₹600 crore of deposits).

Finance Minister Nirmala Sitharaman in her speech for the 2023-24 Union Budget announced: “For commemorating Azadi Ka Amrit Mahotsav, a one-time new small savings scheme, Mahila Samman Savings Certificate, will be made available for two years up to March 2025. This will offer a deposit facility up to ₹2 lakh in the name of women or girls for a tenor of two years at a fixed interest rate of 7.5 per cent with partial withdrawal option.”

TDS (tax deducted at source) is not applied on interest earned on MSSCS, but interest income will be added to total income for tax calculation. MSSCS is classified under “sub-clause (c) of clause (i) of sub-section (3) of section 194A of the Income-tax Act, 1961”. Section 194A deals with provisions relating to TDS on interest other than interest on securities. Tax is to be deducted under section 194A if interest (other than interest on securities) is paid to a resident.

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However, this will not be applicable, as prescribed under sub-clause (c) of clause (i) of sub-section (3), on interest amounting to ₹40,000 on any post-office deposit under any scheme framed and notified by the Central Government. The exemption limit for senior citizens is ₹50,000. At a 7.5 per cent rate of interest, the MSSC scheme will give a return of ₹15,000 in one year and ₹32,000 in two years. It can be said that no TDS will be applicable since the interest accrued in a financial year will be less than ₹40,000,” he said. However, the interest will be added to the total income of the recipient for tax calculation, and if the sum exceeds the taxable limit, then tax at applicable rates need to paid.