Interest earned from the Mahila Samman Certificate scheme will not attract TDS and the interest income will be taxed in the hands of the recipient as per the eligible tax slab, as per a CBDT notification.
The Central Board of Direct Taxes (CBDT) on May 16 notified the Tax Deducted at Source (TDS) provision for the post office savings scheme, under which an account can be opened in the name of a girl or woman.
The scheme which was launched in the current fiscal, provides an annual interest of 7.5 per cent interest and the maximum limit for deposit is Rs 2 lakh. The deposit shall mature on completion of two years.
Nangia Andersen India, Partner, Neeraj Agarwala said the CBDT notification clarifies that TDS on interest earned on the Mahila Samman Saving Certificate (MSSC) is not applicable if such interest does not exceed Rs 40,000 in a financial year.
"At 7.5 per cent 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 said.
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