The Central Board of Direct Taxes (CBDT) has issued Notification No. 27/2023 in S.O. 2189(E) dated 16.05.2023 and notified Mahila Samman Savings Certificate, 2023 as a government scheme under section 194A of the Income-tax Act, 1961 (‘Act’) which allows threshold limit of Rs. 40,000 from deduction of tax or TDS from the interest income.
Accordingly, there will be no TDS on interest income paid on Mahila Samman Savings Certificate, 2023 if the aggregate amount of interest does not exceed Rs. 40,000 in a financial year. If the interest amount on Mahila Samman Savings Certificate, 2023 exceeds Rs. 40,000 in a financial year, then TDS under section 194A @ 10% on aggregate interest income shall apply.
With this notification, TDS on interest on Mahila Samman Savings Certificate, 2023 is brought at par with deposits with a bank or a cooperative bank and other post-office schemes.
This present notification is issued under section 194A(3)(i)(c) which provides a threshold limit of Rs. 40,000 for non-deduction of TDS on interest income on any deposit with post office under any scheme framed by the Central Government and notified by it in this behalf. Mahila Samman Savings Certificate, 2023 is now notified as a Scheme for the purpose of this clause.
On 31st March, 2023, the government notified Mahila Samman Savings Certificate, 2023 under the Government Savings Promotion Act, 1873 which came into effect from 01.04.2023.
Finance Minister while presenting the Union budget for 2023-24 in her budget speech announced that for commemorating Azadi Ka Amrit Mahotsav, a one-time new small savings scheme, Mahila Samman Savings Certificate, will be made available for a two-year period up to March 2025.
This will offer a deposit facility upto Rs. 2 lakh in the name of women or girls for a tenor of 2 years at fixed interest rate of 7.5 per cent with partial withdrawal option.
Also Read:
Full Scheme of Mahila Samman Savings Certificate, 2023
Govt Notifies Mahila Samman Savings Certificate, 2023
Features of Mahila Samman Savings Certificate
The salient features of Mahila Samman Savings Certificate are as follows-
Update:
Government Authorizes Banks to implement and operationalise Mahila Samman Savings Certificate, 2023
One-time investment option- This is a one-time new small savings scheme and will be available upto 31.03.2025 only.
No Credit risk- Mahila Samman Savings Certificate scheme is a small savings scheme backed by the government. Hence, it does not have any credit risk.
Eligibility- The Mahila Samman Savings Certificate can be purchased only by a woman or in the name of a minor girl child.
Deposit amount- The minimum amount of deposit is Rs. 1,000 and the maximum amount of deposit under this MSSC scheme is Rs. 2,00,000.
Maturity- An account under the MSSC scheme can be opened from 01.04.2023 to 31.03.2025 only. This is a one-time scheme.
Rate of interest- The interest rate under Mahila Samman Savings Certificate, 2023 is fixed at 7.5% per annum compounded quarterly. Hence, the annualized yield comes to 7.71%. It is a fixed interest-rated scheme.
Cumulative interest- the interest will be reinvested and will be paid at the time of maturity. No monthly or quarterly or other periodic interest payment is allowed.
Partial withdrawal- Partial withdrawal is allowed after the completion of one year. Upto 40% of the eligible balance can be withdrawn.
Premature closure of account- Premature closure i.e. closure before the maturity period is allowed only in exceptional circumstances.
Tax Benefits- No tax benefit on making an investment in Mahila Samman Savings Certificate is announced. As per general rules, the interest income on this scheme shall become taxable.
Considering the fact that one can invest a maximum of Rs. 2,00,000 in this scheme at an interest of 7.5% p.a. compounded quarterly, the annual interest comes to Rs. 15,427/- in a financial year which is way below the threshold limit of Rs. 40,000/- for TDS under section 194A. Hence, effectively, the interest on Mahila Samman Savings Certificate is exempt from TDS under section 194A since the interest amount will always be lesser than the threshold limit of Rs. 40,000 under the present circumstances.
Read CBDT Notification No. 27/2023 dated 16.05.2023 on Notifying threshold limit u/s 194A for interest on Mahila Samman Savings Certificate
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 16th May, 2023
INCOME-TAX
S.O. 2189(E).—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 (43 of 1961), the Central Government hereby notifies that the Scheme namely the Mahila Samman Savings Certificate, 2023, made in exercise of the powers conferred by section 3A of the Government Savings Promotion Act, 1873 (5 of 1873) and notified vide notification number G.S.R. 237(E) dated the 31st March, 2023 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), shall be a Scheme framed for the purposes of said sub-clause.
2. This notification shall come into force from the date of its publication in the Official Gazette.
[Notification No. 27/2023/F. No. 370142/11/2023-TPL]
MRINALINI KAUR SAPRA, Director
Download CBDT Notification No. 27/2023 dated 16.05.2023 on Notifying threshold limit u/s 194A for interest on Mahila Samman Savings Certificate in PDF format
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