News Highlight
Mahila Samman Saving Certificate offers higher interest than bank FDs and most other post office schemes.
Key Takeaway
- The Mahila Samman Saving Certificate (MSSC) is a one-time small savings scheme for women investors that Finance Minister announced in Budget 2023.
- Through the Mahila Samman Savings Certificate, individuals can make deposits in the name of a woman or a girl child.
Mahila Samman Saving Certificate (MSSC) Scheme
- About
- The initiative allows deposits of up to Rs 2 lakh in the name of women or girls for two years.
- In addition, it has a fixed interest rate of 7.5%.
- This system has no tax advantages; however, partial withdrawal is permitted.
- This is a one-time plan launched in Budget 2023 that will be accessible for two years until March 2025.
Benefits of MSSC
- Fixed Returns
- The interest rate on the Mahila Samman Savings Certificate is 7.5%, providing better returns than traditional bank fixed deposits.
- Government Backed
- The Indian government backs the savings certificate, making it a safe investment option.
- Tax Benefits
- Some minor savings schemes, such as the MSSC, provide tax breaks under Section 80C of the Income-tax Act of 1961.
- Partial Withdrawal Option
- The Mahila Samman Savings Certificate allows for partial withdrawals, making it a versatile investment vehicle.
Comparison with Other Savings Schemes
- Interest rates
- The National Savings Certificate plan offers 7%, and SBI, HDFC Bank, and ICICI Bank give a maximum of 7.25%.
- Tenure
- The MSSC has a 2-year term, whereas the PPF has a 15-year term, and the National Savings Certificate has a 5-year term.
- Eligibility
- The Mahila Samman Savings Certificate is available only to women and girls, whereas other savings plans are available to everyone.
Other Small Saving Schemes
- Kisan Vikas Patra (KVP)
- India Post introduced the Kisan Vikas Patra in 1988.
- Additionally, it is a savings certificate programme designed to promote long-term financial discipline.
- The Government of India stopped the scheme in 2011 after a Government Committee suggested that it could be used for money laundering.
- Later, in 2014, the Kisan Vikas Patra (KVP) was revived.
- According to the Kisan Vikas Patra 2014 modification, the scheme has a term period of 118 months and a minimum investment of Rs. 1000.
- Small Savings Scheme (SSS)
- SSS are a collection of savings instruments controlled by the federal government to encourage residents of all ages to save consistently.
- They are popular because they generate larger yields than bank fixed deposits.
- Additionally, they come with a government guarantee and tax advantages.
- The National Modest Savings Fund collects all deposits through various small savings plans.
- The funds in the fund are used to finance the central government’s fiscal imbalance.
- Post Office Savings Scheme
- The Post Office is one of the oldest institutions in India, having been founded in Oct 1854 under British rule.
- Initially focussing mainly on delivering mail (post) and expanding to include various other financial services such as Banking, Insurance, and Investments.
- The most significant feature of these programmes is their sovereign guarantee, which means the government supports them.
- Furthermore, some post office savings plans also provide tax breaks under Section 80C of the Income Tax Act.
Conclusion
- The Mahila Samman Savings Certificate plan, with its fixed rates, government support, tax incentives, and partial withdrawal choices, provides a safe and flexible investment alternative for women and girls.
- Knowing that the government announces interest rates for modest savings schemes once every quarter is crucial.
- Furthermore, evaluating the interest rates offered by various plans is a good idea.
Pic Courtesy: Banking Finance
Content Source: Economic Times