The Government has introduced many small savings schemes, which are investment tools for most people.
The popular savings schemes are Public Provident Fund (PPF), National Savings Certificate (NSC), Senior Citizens Small Savings Scheme (SCSS) and Sukanya Samriddhi Yojana (SSY).
And to promote more savings and investment among girls and women, the Government has launched the Mahila Samman Savings Certificate (MSSC). Let’s discuss whether it is better than other schemes.
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What is the Mahila Samman Savings Certificate?
Mahila Samman Savings Certificate is a government savings scheme designed to encourage women to save and invest. The Indian Government launched the scheme during the 2023 budget.
Surprisingly, it is a one-time fixed savings plan. That means you can invest in this scheme only between April 2023 to March 2025. After that, you won’t be able to invest or save money through this scheme.
Deposit limit and tenure of MSSC
Indian women can invest a maximum amount of ₹2 lakhs in MSSC. The interest rate is fixed at 7.5% per annum for two years.
The scheme will pay the interest and investment amount out at maturity after 2 years.
The scheme allows for a partial withdrawal.
Tax benefits of MSSC
The Government has provided no information about the tax benefits of the Mahila Samman Savings Certificate. Government is yet to clarify whether the investments in MSSC will be tax-free, taxable at maturity, or taxable each year based on interest.
How can you invest in MSSC?
Only Indian girls and women are eligible to invest in the Mahila Samman Savings Certificate. You can also invest on behalf of your girl child.
You can invest in this scheme through any post office or public sector bank from April 2023.
Should you invest in Mahila Samman Savings Certificate?
We should always take investment decisions based on our goals, risk appetite, financial situation, etc.
After looking at the tenure, interest rate and other details, the scheme does look good on paper. But the reality is different.
Many people are comparing this scheme with other long-term savings schemes offered by the Government, like PPF, SSY, etc., which is wrong. MSSC is a short-term savings scheme and should be compared with similar schemes.
Mahila Samman Savings Certificate does provide better interest rates than other fixed deposit savings schemes offered by the Government through post offices. But when compared with fixed deposits by banks, MSSC doesn’t look that attractive.
As of March 2023, most fixed deposits with 2-year tenure are offering similar returns of around 7.5%. And if you look for fixed deposits in small finance banks, the interest rate is around 8.5%.
Unless the Government provides any good tax benefits on Mahila Samman Savings Certificate, savings in fixed deposits look good.
But remember that returns on fixed deposits may change soon. Maybe next year, fixed deposits may offer lower interest rates. So check all your options before choosing your savings scheme.
Also, you can invest online in FDs, but for now, you can only invest in Mahila Samman Savings Certificate through the offline route.
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