BackInterest income from Mahila Samman Certificate will not attract TDS: Finance Ministry
According to a CBDT announcement, interest received under the Mahila Samman Certificate programme would not be subject to TDS and will instead be taxed based on the applicable tax bracket of the account holder.
PremiumAccording to a CBDT announcement, interest received under the Mahila Samman Certificate programme would not be subject to TDS and will instead be taxed based on the applicable tax bracket of the account holder. On Tuesday, the Central Board of Direct Taxes (CBDT) made an announcement on the same.
The programme, which was introduced duringFY23, offers a maximum deposit amount of Rs. 2 lakh and a yearly interest rate of 7.5%. Mahila Samman Certificate scheme comes with a maturity tenure of 2 years. The minimum and maximum investments in the plan are each worth ₹1,000 and ₹2 lakh.
Nangia Andersen India, Partner, Neeraj Agarwala said the CBDT notification clarifies that TDS on interest earned on the Mahila Samman Saving Certificate (MSSC) is not applicable if such interest does not exceed ₹40,000 in a financial year.
"At 7.5 per cent 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," Agarwala said.
Nehal Gupta, Director, AMU Leasing said "We commend the government's initiative in introducing the Mahila Samman Savings Scheme, which aims to empower women and promote their financial independence. The scheme not only provides a safe and secure investment option for women but also offers attractive interest rates, encouraging them to save and grow their wealth. However, it is important to understand the tax implications associated with the scheme, particularly regarding TDS (Tax Deducted at Source) on the interest earned. As per the article, TDS is applicable if the interest exceeds a certain threshold. It is essential for women participating in this scheme to be aware of the tax regulations and plan their investments accordingly to avoid any surprises. We urge the government to provide clearer guidelines and raise awareness among women about the taxation aspects of the Mahila Samman Savings Scheme, ensuring transparency and ease of compliance."
Edul Patel, Co-founder and CEO at Mudrex said “The CBDT's decision regarding the taxation of interest from the Mahila Samman Savings Scheme aims to ensure consistency in its treatment compared to other interest-bearing instruments. It is noteworthy that the exemption of TDS demonstrates a recognition of the importance of empowering women to responsibly manage their tax obligations and offering them a certain level of exemption in this regard."
Pratik Vaidya MD, and CVO, Karma Global said “Unlike FDs and other instruments where TDS is deducted at source , this MSSC scheme for women which was announced in February 2023 in the Union Budget, is a new small savings scheme for women launched from April 1, 2023. It means that this scheme which provides an interest of 7.5 % with maximum deposit of 2.00 lakhs maturing on completion of 2 years, TDS on interest earned is not applicable at source if the interest does not exceed 40,000 in a financial year."
"To give a simple example “At 7.5 per cent 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. However, it will be worthy to note that as of now, the Mahila Samman Savings Certificate does not qualify for any tax benefits like 80C or exemptions as a form of investment under the Income Tax Act, 1961. Thus, interest earned under this scheme will be taxable depending on the applicable tax slabs," said Pratik Vaidya.
“It can be said that this Mahila Samman Savings Certificate is a one-time savings scheme for women announced by the government in Budget 2023 mainly for the sole purpose of empowering women by increasing their participation in investments. It is a government-guaranteed scheme where women can put aside some money and earn a fixed interest of 7.5% which can be used at a later date for some important purpose or occasion," Pratik Vaidya added.
“Any woman can open a Mahila Samman account can be opened for herself or on behalf of a little girl. Women investors must submit Form - I latest by March 31, 2025 which is the last date for this scheme to close. The other investment schemes for women in India are PPF, EPF, ULIP, KVP, SSY. FDs, LICs, NPS, Mutual Funds, NSCs, Bonds, and a women can pick up any but looking at risk tolerance will be the key factor depending on what suits their financial goals," said Pratik Vaidya.
With inputs from PTI
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