Last Updated on April 19, 2023 by Ravi Sankar Robbi
Mahila Samman Savings Certificate, 2023 (MSSC) is a new scheme introduced by Finance Minister Shri Nirmala Sitharaman garu in the Budget 2023.
This scheme comes under Small Savings Scheme and is intended to encourage investment from Women. In this article, let’s understand it completely first and then we will discuss for whom this scheme is beneficial.
1. For whom?
This scheme is intended ONLY for Women and Minor girl child. For minors, the account can be opened by the guardian in her name. And this account can be opened in any Post Office or Authorized bank.
2. Minimum & Maximum Investment
The account can be opened with a minimum amount of Rs. 1,000 and the maximum amount that can be invested is Rs. 2 Lakh (for all accounts under this scheme) and investment should be in multiple of Rs. 100.
Do remember, NO subsequent deposit will be allowed under this scheme. And it’s a single holding account, NO joint account allowed.
3. Restriction on number of accounts
There is NO limit on the accounts you can open under this scheme. So multiple accounts can be opened, but the upper investment limit for all accounts together is Rs. 2 lakh. But a gap of 3 months should be there between 2 accounts.
4. Cut-off date
It is a ONE-time scheme (unless extended) announced by the Govt in the Budget 2023. W.e.f. 1.4.2023 you can invest and the cut-off date is 31.3.2025.
So make sure to invest in the scheme on or before 31.3.2025.
5. Interest Rate
Unlike bank deposits, this scheme is offering a decent return for the lock-in of 2 years which is 7.5% p.a. compounded quarterly, so effective interest would be 7.714% p.a.
If you invest Rs. 2 Lakh, you will receive Rs. 2,21,356 at the time of maturity.
The amount invested will mature after 2 years from the account opening date. However, if you want to withdraw partially you can do so by submitting the necessary documents.
7. Partial Withdrawal
After opening the account but before maturity, if you want to withdraw some amount you may do so after 1 year from the account opening date. But the maximum withdrawal is limited to 40% of the balance ONLY.
8. Premature closure
Once account is opened, it can be closed only after maturity. However, under the following scenarios, premature closure is allowed.
(i) Death of the account holder / Guardian:
Pre-closure is allowed before maturity subject to the submission of necessary documents. In such case, the balance amount will paid along with the FULL interest i.e. 7.5%
(ii) Medical Support for Life-threading diseases:
Similarly, if an account holder is facing hardship due to the medical support for Life-threatening diseases, then also Pre-closure is allowed and balance amount is eligible for FULL interest i.e. 7.5%
(iii) Other cases:
For any other case (other than the above two), Pre-closure can be done at any time after 6 months from the account opening date & eligible for 5.5% interest ONLY (2% as penalty for pre-closure)
9. Tax benefits & Taxability
Though the returns and lock-in is very lucrative, investment under this scheme is NOT eligible for tax benefit under Sec 80C. In addition, interest earned will be taxable under “Income from Other sources” as per your slab rate.
In case of a minor account, interest earned from such account will be clubbed in the parents hands.
This scheme is definitely a better one when compared to other similar schemes available in the market.
Women’s Perspective: A normal bank FD with the same tenure (2 yrs) will yield hardly 7% (check), whereas for the same period, it is giving 7.5%
Minor child Perspective: Sukanya Samriddhi Yojana (SSY) will yield 8% for a minimum tenure of 15 years, whereas this scheme will yield 7.5% within 2 years only.
So if you are planning for your girl child or wife, this scheme is worth trying.
Thank you for your time.
Author is a Qualified CMA with an experience of more than 8 years in the industry. He is also an All India Rank holder in both Inter (AIR-26) & Final (AIR-46) examinations of ICAI. He loves to writes articles on Income Tax & GST.