• Notification Date: 23-05-2023
• Notification No: N/A

TDS Not Applicable on Interest from Mahila Samman Savings Certificate

The Central Board of Direct Taxes (CBDT) recently issued a notification clarifying that interest earned from Mahila Samman Savings Certificate (MSSC) will not be subject to Tax Deducted at Source (TDS). This announcement brings relief to individuals investing in the scheme, as the interest income will now be taxed in the hands of the recipient as per their eligible tax slab. Here’s an overview of the scheme and the implications of the CBDT’s notification. 

Scheme Overview 

The Mahila Samman Savings Certificate scheme was introduced during FY23 as a savings option exclusively for girls and women. It offers an attractive annual interest rate of 7.5% and allows individuals to open an account in their name. The maximum deposit limit for the scheme is set at Rs. 2 lakhs, making it an accessible and empowering financial instrument for women. 

Maturity Tenure and Investment Limits 

The Mahila Samman Savings Certificate scheme comes with a maturity tenure of 2 years. Individuals can invest a minimum amount of Rs. 1,000 and a maximum amount of Rs. 2 lakhs in the plan. These flexible investment limits enable women from all walks of life to participate and benefit from the scheme. 

TDS Exemption on Interest Income 

The recent CBDT notification provides clarity on the taxation of interest earned from Mahila Samman Savings Certificate. As per the notification, if the interest earned does not exceed Rs. 40,000 in a financial year, no TDS will be applicable. This means that individuals will not face any deduction of tax at the source on their interest income from the scheme. 

Taxation in the Hands of the Recipient: 

With the exemption of TDS, the interest income from the Mahila Samman Savings Certificate will be taxed in the hands of the recipient. The income will be subject to the individual’s eligible tax slab, which ensures a fair and personalized taxation approach based on one’s overall income and tax liability. 

Implications for Investors: 

The CBDT’s notification brings significant benefits to investors in the Mahila Samman Savings Certificate scheme. By removing the burden of TDS, individuals can now enjoy the full interest amount without any immediate tax deductions. This provision will positively impact the overall returns generated by the scheme and encourage more women to participate in it. 

Encouraging Financial Empowerment 

The Mahila Samman Savings Certificate scheme, with its attractive interest rate and flexible investment options, aims to promote financial empowerment among women. By providing a tax-efficient savings avenue, the scheme encourages women to save and grow their wealth while supporting their financial independence.