All you need to know about the new Mahila Samman Savings Certificate
Through the Mahila Samman Savings Certificate, individuals can make deposits in the name of a woman or a girl child. The maximum investment limit is Rs 2 lakh. Investors can earn a fixed interest rate of 7.5 per cent under this scheme. Do note that this is a one-time scheme, and it will remain available for two years — i.e., up to March 2025.
Is the Mahila Samman Savings Certificate (MSSC) better than other small savings schemes?
The interest rate offered under the Mahila Samman Savings Certificate is higher than those of most small savings schemes. For instance, a two-year time deposit offers 6.8 per cent.
There are only two small savings schemes that offer a higher interest rate than Mahila Samman Savings Certificate — the Sukanya Samriddhi Yojana and the Senior Citizen Savings Scheme.
Also Read: New small savings scheme for women, Mahila Samman Savings Certificate, launched
The Sukanya Samriddhi Yojana offers 7.6 per cent, while the Senior Citizen Savings Scheme offers an interest rate of 8 per cent for the January-March quarter in 2023.
These schemes come with a longer lock-in period and other terms and conditions are also applicable while investing in both the Sukanya Samriddhi Yojana and the Senior Citizen Savings Scheme.
Do note that the central government revises the interest rates for small savings schemes every quarter, whereas the interest rate of the Mahila Samman Savings Certificate will be fixed for two years.
Mahila Samman Savings Certificate vs bank fixed deposits
When compared with the fixed deposits being offered by large banks now, the Mahila Samman Savings Certificate offers at least a 0.50-1 per cent higher interest rate than most popular banks. For instance, HDFC Bank, ICICI Bank and Kotak Mahindra Bank offer an interest rate of 7 per cent on fixed deposits maturing within two years. Public sector lender State Bank of India (SBI) offers a much lower interest of 6.75 per cent. So, this new small savings scheme offers slightly higher interest rates than the FDs at prominent banks. However, the FD interest rates have been rising and a further increase in coming months cannot be ruled out.
The interest earned on FDs is considered as income from other sources and is fully taxable. The interest earned is included in your gross annual income, and your tax liability is calculated at the applicable slab rate. Moreover, the interest income from fixed deposits will be taxable if the earnings in a financial year exceed Rs 50,000 in case of senior citizens and Rs 40,000 in case of others. The TDS is deducted at 10 per cent.
As far as TDS for the new savings scheme is concerned, the financial ministry is yet to share the details. These will be notified in due course.
Considering the prevailing interest rate, the Mahila Samman Savings Certificate appears to be a good investment option, according to experts. “Those who have limited savings and want reasonable returns over the short term can consider the Mahila Samman Savings Certificate scheme instead of bank fixed deposits, which offer low-to-similar returns,” said Dev Ashish, a SEBI-registered investment advisor (RIA) and Founder, StableInvestor.
A look at the various small savings schemes, bank fixed deposits and their interest rates
| Scheme | Interest Rate (%) | Compounding frequency |
| 2 Year Time Deposit | 6.8 | Quarterly |
| Public Provident Fund Scheme | 7.1 | Annually |
| National Savings Certificate | 7 | Annually |
| Sukanya Samriddhi Account Scheme | 7.6 | Annually |
| Kisan Vikas Patra | 7.2 | Annually |
| Senior Citizen Savings Scheme | 8 | Quarterly and paid |
| Monthly Income Account | 7.1 | Monthly and paid |
| Bank FDs | 6.75-7 | Quarterly |
| Mahila Samman Savings Certificate | 7 | Yet to be known |
Key features of the Mahila Samman Savings Certificate scheme
– Backed by the central government.
– One-time small savings scheme.
– Fixed interest rate of 7.5 per cent.
– Maximum investment limit is Rs 2 lakh.
– Lock-in period will be two years.
– Partial withdrawal option is available.
We have to wait to get all the details about the new scheme before arriving at a more conclusive decision.
Like all the budget announcements, the Mahila Samman Savings Certificate is likely to come into effect from April, 2023.
But here are some details that require clarity in the Mahila Samman Savings Certificate scheme:
– Will the interest rate (7.5 per cent) be calculated quarterly or annually?
– We need to get more clarity on how tax and tax deducted at source (TDS) will be applicable to the scheme.
– Partial withdrawal will be available, Sitharaman had said. But how will this work and will there be a penalty or charges for premature withdrawal?
– The minimum investment limit is not yet known; maximum is Rs 2 lakh.