May 19, 2023: Income earned through the Mahila Samman Savings Certificates will not attract TDS (tax deducted at source), the Central Board of Direct Taxes (CBDT) has notified. This interest income, however, will be added to the overall income of the taxpayer. They will then have to pay tax on the amount based on their tax slab, according to the CBDT notification dated May 16, 2023.
According to Nangia Andersen India partner Neeraj Agarwala this means that TDS on interest earned on the Mahila Samman Saving Certificate is not applicable if such interest does not exceed Rs 40,000 in a financial year.
“At 7.5% interest, the MSSC scheme will give a return of Rs 15,000 in one year and Rs 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 Rs 40,000,” Agarwala told news agency PTI.
“In exercise of the powers conferred by sub-clause (c) of clause (i) of sub-section (3) of section 194A of the Income-tax Act, 1961, the Central government notifies that the Mahila Samman Savings Certificate, 2023, made in exercise of the powers conferred by Section 3A of the Government Savings Promotion Act, 1873, shall be a scheme framed for the purposes of said sub-clause,” the CBDT notification read.
Section 194A lays rules on TDS deduction on interest income other than the one earned through securities. Provisions of this section are applicable on residents and not NRIs. Section 194A Sub-Section 3 talks about the exceptions where TDS will not be applicable under the said rule.
Aimed at enabling financial inclusion and empowerment of the women, the scheme was announced in the 2023-24 Budget by finance minister Nirmala Sitharaman. Under the post-office savings scheme, an account can be opened in the name of a girl or woman.
Meanwhile, the department of economic affairs through an e-gazette notification issued on June 27, 2023, permitted all public sector banks and eligible private sector banks to implement and operationalise the Mahila Samman Savings Certificate, 2023. This aims at enabling enhanced access of the scheme for girls/women. With this, the scheme will now be available for subscription in post offices and eligible scheduled banks.
