During the Budget 2023 speech, the Finance Minister announced that to commemorate the ‘Azadi Ka Amrit Mahotsav’, a one-time new small savings scheme will be introduced for females.
On 31st March 2023, the Government issued a notification with the details of the Mahila Samman Savings Certificate, 2023. Let us look at the details of the small savings scheme.
The account opening application has to be made by the woman herself at the post office or authorised banks. In the case of a minor girl, the guardian has to make the application. An account can be opened under this scheme on or before 31st March 2025. The account shall be a single holder type, i.e. no joint accounts are allowed.
Minimum and maximum deposit amounts
An account can be opened with a minimum of Rs. 1,000 and any sum in multiples of Rs. 100. As it is a one-time deposit account, no subsequent deposits can be made in that account. An individual can open multiple accounts. However, the aggregate deposit amount across all accounts cannot exceed Rs. 2 lakhs for an individual. A time gap of 3 months has to be maintained between an existing account and the opening of a new account.
An interest of 7.5% p.a. will be paid on deposits under this scheme. The interest will be compounded quarterly and credited to the account. With quarterly compounding, the effective interest rate will be 7.71%.
Every deposit account under this scheme will have a tenure of 2 years. On maturity, the eligible amount (principal and interest) will be paid to the account holder on submitting the duly filled Form-2. With quarterly compounding, a deposit of Rs. 2 lakhs will yield Rs. 2,32,044 on maturity after 2 years.
An account holder can make a partial withdrawal from the account after the expiry of one year from the date of account opening. The maximum withdrawal allowed is up to 40% of the eligible balance. The account holder has to submit the duly filled Form-3 for withdrawal. For a minor account holder, the guardian has to make the withdrawal application for the welfare of the minor girl.
The account can be closed prematurely in the following cases:
- On the death of the account holder, or
- The account holder is suffering from some life-threatening disease, and the money is required for medical support. In such a situation, if the post office or bank officer is satisfied, they may allow premature account closure after completing the documentation and recording the reasons in writing.
In both the above cases, the interest on the principal amount will be payable at the applicable rate for the tenure for which the money was deposited.
Apart from the above cases, premature closure may be permitted after the completion of 6 months from the date of account opening. In such cases, an interest penalty of 2% will be levied, resulting in an interest rate of 5.5% instead of the original 7.5%.
The Government has not mentioned any tax benefits for the Mahila Samman Savings Certificate. Based on this, it can be assumed that:
- There is no Section 80C deduction benefit at the time of investment
- The interest earned will be added to your total income and taxed at the slab rate
Should you invest in the scheme?
While the Mahila Samman Savings Certificate has several advantages, it is open for application only till 31st March 2025 and has a short tenure of only two years. The maximum investment is also limited to just Rs. 2 lakhs.
With this scheme, the Government has taken a significant step towards women’s financial inclusion and empowerment. Women should consider investing in the scheme as it pays a good interest rate of 7.5% p.a. and is government-guaranteed, thus offering the highest safety.
Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached at LinkedIn.