Mahila Samman scheme for women catches on, sees 5 lakh enrolments since launch

If women’s financial empowerment was the aim, the new scheme announced in Union Budget 2022-23 – the Mahila Samman Savings Certificate (MSSC) – has been successful. The scheme has already received over 5 lakh enrolments since its April 2023.

Announced by Union Finance Minister Nirmala Sitharaman, MSSC is a one-time small savings scheme for women and girls, available till March 2025. Deposits can range from Rs 1,000 to Rs 2,00,000. The scheme offers an annual interest rate of 7.5 per cent, with a partial withdrawal option. The maturity period is two years from the date of account opening. The scheme subscription is available via post offices.

This scheme has a fixed annual interest rate of 7.5 per cent, much higher than most bank Fixed Deposits (FDs). The interest will be credited quarterly and paid at the time of closure of the account.

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Speaking to The Federal, Priti Rathi Gupta, MD and founder of LXME, a neo-bank for women, said: “As per an online report, the MSSC has received over 5 lakh enrolments. This scheme was launched quite recently – in April 2023 – and I am confident that it will receive an increasingly positive response from women across the country.”

Taxation

The scheme comes with some tax benefits. Tax Deducted at Source (TDS) is not deducted from the interest received under this scheme.

As per Section 194A of the Income Tax Act, TDS will apply only when the interest received from the post office savings scheme in a financial year is more than Rs 40,000 or Rs 50,000 (in the case of senior citizens). Since the interest amount of this scheme for a maximum of Rs 2 lakh investment for two years does not exceed Rs 40,000, TDS is not deducted from the interest received under the scheme.

It is to be noted, however, that the interest will be taxed based on the applicable tax bracket of the account holder.

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Only in rare instances such as the account holder’s death, medical emergencies or the guardian’s death, the closure of the account before maturity is permitted.

LXME’s Gupta views the response to MSSC as an extension of the rising financial awareness of Indian women. “The involvement of women in investing in financial assets has increased in recent years as a result of rising awareness, but there is still a long way to go,” she observed. “Fixed deposits, gold, and recently, mutual funds are some of the popular investment options among women. The introduction of the MSSC is a great initiative taken by the government. The upcoming years appear to be promising, and will see a rise in the number of women investors in financial assets.”

Other schemes

Another government scheme for women is the Sukanya Samriddhi Yojana (SSY). This is directed at the girl child, and not adult women.

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The SSY, a scheme created with the intention to benefit the girl child under the initiative Beti Bachao – Beti Padhao initiative, carries a higher interest rate with several tax benefits. The parent or guardian of the girl child who is 10 years of age or younger can open an account under this scheme.