Mahila Samman Savings Certificate is a government-backed investment scheme for women run by the post office. It provides attractive interest rates to help women meet their financial needs. Although the MSSC scheme is for two years, it allows withdrawals and premature closures, and the refund amount could be subject to a penalty based on the reasons provided or not provided.

The scheme is open to all women, regardless of age. In the case of minor children, the parents or guardians can manage the accounts on their behalf until they reach adulthood. The scheme offers a fixed interest rate of 7.5 per cent per annum, higher than most bank fixed deposit (FD) rates and other popular investment schemes. The interest is credited quarterly, and the entire amount is directly transferred to the subscriber’s bank account on maturity or when the account is closed.

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How Much Can One Deposit?

The minimum deposit amount is Rs 1,000; after that, in multiples of Rs 100. The maximum deposit amount is Rs. 2 lakh per individual, whether they hold one or multiple accounts. Also, the guardian of a female child can create a second account after completing three months from the opening of the first account.

Withdrawal, Maturity & Premature Closure

The subscriber can withdraw up to 40 per cent of the fund after a year of opening the account.

After maturity, the entire amount, along with the accumulated interest, is returned to the investor. In the case of a minor child, the parents or guardians can initiate the process.

There are two scenarios for premature closure. First, the account can be closed if the account holder dies. Second, it is allowed on compassionate grounds, such as a life-threatening illness or death of a guardian, provided they produce documentary evidence. In this scenario, both the principal amount and the interest accrued will be returned. However, if the subscriber does not specify any reason for closing the account, 2 per cent interest will be deducted from the total accrued interest, which comes to 5.5 per cent annual interest.

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Tax Benefits

In this scheme, TDS, or tax deducted at source, would be levied only if the interest earned in a financial year exceeds Rs 40,000 and Rs 50,000 for senior persons under Section 194A of the Income Tax Act, 1961. Since the maximum investment amount in this scheme is Rs 2 lakh for two years, with an annual interest rate of 7.5 per cent, the interest amount will be below Rs 40,000. However, if the subscriber has other sources of interest income, TDS will be applied accordingly.