Mahila Samman Savings Certificate Explained

The government of India recently launched the Mahila Samman Savings Certificate in an attempt to empower women by promoting their financial inclusion. This certificate is a small savings scheme, launched exclusively for women that allows them to participate in investment, even with limited knowledge of banking and finance.

Defining The Mahila Samman Savings Certificate

The Mahila Samman Savings Certificate is a government-guaranteed, one-time savings scheme for women that allows them to earn a fixed interest rate of 7.5%. It is available only for a period of two years; from April 2023 – March 2025. Thus, the scheme cannot be invested into after March 2025.

The scheme was announced by Union Finance Minister Smt. Nirmala Sitharaman during her Budget Speech of 2023-2024 to commemorate the Azadi ka Amrit Mahotsav. It became available for access in Post Offices across the country from 1st April 2023.

Features Of The Mahila Samman Savings Certificate

The main features of the Mahila Samman Savings Certificate are as follows:

• It offers guaranteed returns: The Mahila Samman Savings Certificate is a government-backed scheme, which means that there is no credit risk to an investment and returns are guaranteed.

• It is available only to women: The Mahila Samman Savings Certificate is catered toward women. Thus, an investment in the scheme can only be made by women or for women, in case of minors.

• It has a fixed rate of interest: The interest rate for the Mahila Samman Savings Certificate is fixed at 7.5%, which is compounded quarterly. Thus, the effective interest rate becomes 7.71%.

• It has deposit limits: The minimum amount that can be invested into the Mahila Samman Savings Certificate is INR 1,000, while the maximum amount that can be invested is INR 2,00,000. The investment must be made in multiples of INR 100, and can be made into multiple accounts. However, the total invested amount – even over multiple accounts – must not exceed INR 2,00,000. Additionally, there should be a three-month gap between the opening dates of every account.

• It has a two-year maturity period: The Mahila Samman Savings Certificate is a two-year scheme. That is, it comes with a lock-in period of two years and the maturity amount will be available only two years after the opening of an account. Moreover, the scheme itself is available for investment only for the two-year period between April 2023 and March 2025.

• It allows for partial withdrawal: The Mahila Samman Savings Certificate has a partial withdrawal facility, which allows you to withdraw your balance before the scheme matures. This facility is available after one year from the date of account opening, and only allows for the withdrawal of 40% of the available balance.
  
  It allows for premature closure under certain conditions
  The Mahila Samman Savings Certificate allows for the closure of an account before maturity only under certain conditions, which are as follows:

• On the death of the account holder.

• In situations such as the account holder acquiring a fatal illness, the guardian of the account holder passing away, etc. In all such situations, relevant documents must be provided.

• After six months from account opening without any reason. However, in such cases, the rate of interest is reduced from 7.5% to 5.5%.

Tax Benefits Of The Mahila Samman Savings Certificate

Tax Deducted at Source (TDS) is not applicable to the Mahila Samman Savings Certificate. This is because, according to Section 194A of the Income Tax Act, TDS applies only when the interest received from a post office savings scheme exceeds INR 40,000 or INR 50,000 in the case of senior citizens, and this isn’t possible in this scheme as it has a maximum investment amount of INR 2,00,000 and a fixed interest rate of 7.5%. That leads to the maximum interest possible on this scheme being INR 31,125 for two years.

Considering your investment amount to be INR 2,00,000, the interest you receive in the first year will be INR 15,000, while, in the second year, you will receive INR 16,125. Together, at the end of two years, this becomes INR 31,125.

How To Open A Mahila Samman Savings Certificate Account

The Mahila Samman Savings Certificate is a savings scheme made available by the India Post. Simply follow the following steps to open an account and receive the certificate:

• Head to the India Post official website and download the account opening application form. You can also physically go to your nearest post office and get the form.

• Fill out the form with your personal details and other requested information.

• Attach your ID and address proof with the application form.

• Fill out and submit a KYC form as well, if your account with the Post Office is new.

• Submit all of the above along with your completed application form to the nearest Post Office.

• Deposit your investment amount either in cash or as a cheque.

• Receive the certificate that will act as investment proof in the Mahila Samman Savings Certificate Scheme.

Documents Required To Open A Mahila Samman Savings Certificate Account

The documents required to open a Mahila Samman Savings Certificate account include:

• The application form

• KYC documents such as your Aadhaar card, driving license, PAN card, etc.

• A KYC form, if you’re a new post office account holder

• The pay-in slip

Mahila Samman Savings Certificate Vs. Other Small Savings Schemes

Over the years the government of India has launched many small savings schemes to encourage financial inclusion. For example, the National Savings Scheme (NSC), the Public Provident Fund (PPF), the Senior Citizen Savings Scheme (SCSS), the Sukanya Samridhi Yojana (SSY), and so on.

Let’s take a look at how the Mahila Samman Savings Certificate compares to some of the above-mentioned schemes:

To conclude, the Mahila Samman Savings Certificate is a one-time, small savings scheme exclusively for women announced in the Budget 2023. It is a two-year scheme meant to encourage women to invest more and have financial inclusion. To apply for this scheme, just head to your nearest post office or bank! Follow Andromeda Loans for more such interesting blog posts.