• Notification Date: 19-05-2023
  • Notification No: N/A

TDS Applicable on Interest Earned from Mahila Samman Savings Scheme

The Central Board of Direct Taxes (CBDT) has issued a notification clarifying that TDS will be applicable to the interest earned on the Mahila Samman Savings Scheme. As per the new notification, tax will be deducted on the interest earned from the Mahila Samman Savings Scheme under Section 194A of the Income Tax Act, 1961. The notification was issued by the income tax department on May 16, 2023. 

TDS Calculation Process 

The TDS under Section 194A is applicable if the interest earned from the scheme in a financial year exceeds Rs 40,000. The interest can be earned from deposits held with a bank, post office or co-operative society. This is the same way TDS is applicable on the interest earned on bank FDs. In case of senior citizens, the threshold is Rs 50,000, instead of Rs 40,000. 

As per the CBDT notification issued, “In exercise of the powers conferred by sub-clause (c) of clause (i) of sub-section (3) of section 194A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that the Scheme namely the Mahila Samman Savings Certificate, 2023, made in exercise of the powers conferred by section 3A of the Government Savings Promotion Act, 1873 (5 of 1873) and notified vide notification number G.S.R. 237(E) dated the 31st March, 2023 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), shall be a Scheme framed for the purposes of said sub-clause.” 

Features of Mahila Samman Savings Scheme 

The Mahila Samman Savings Scheme was announced by Finance Minister Nirmala Sitharaman in the Union Budget 2023. The scheme is a women-specific small savings scheme. The scheme was notified by the government on March 31, 2023, and came into force from April 1, 2023, onwards. 

The scheme offers an interest rate of 7.5 per cent per annum. The interest rate will remain fixed throughout the investment period of two years. The interest earned from the scheme is also taxable. There is no tax exemption available on the interest earned from the scheme. 
The scheme’s minimum and maximum investment amounts are Rs 1,000 and Rs 2 lakh, respectively. The scheme has a tenure of two years. 

Do note that as per Union Budget 2023 announcement, the scheme is available for two years only. A woman can invest in the scheme between April 1, 2023, and March 31, 2025. The investment in the scheme will not be allowed after April 1, 2025, unless the government extends the date.