Earn 7.50% Interest on a Rs 2 Lakh Deposit, Get Rs 32,000 in Interest Income Over 2 Years


In today’s world, individuals with surplus funds often seek avenues to invest and grow their wealth. The investment landscape is diverse, catering to different risk appetites of investors. For those looking for safe and secure investment options with smaller amounts, government-backed savings schemes can be an attractive choice. One such scheme tailored specifically for women is the Mahila Samman Savings Scheme. This essay delves into the nuances of this scheme, providing a comprehensive understanding of its features, benefits, and potential returns.

Understanding the Mahila Samman Savings Scheme:

1. Purpose and Tax Benefits:
The Mahila Samman Savings Scheme is a unique investment avenue designed exclusively for women. Unlike some other schemes, this one does not offer any tax benefits. However, it compensates for this by offering a flexible investment plan that allows for partial withdrawals. The scheme is ideal for women seeking a secure and convenient investment option without the complexities of tax-saving instruments.

2. Flexibility and Compounding Benefits:
One of the noteworthy features of the Mahila Samman Savings Scheme is its flexibility. Investors can start with a minimum deposit of Rs 1,000 and invest in multiples of Rs 1,000 up to a maximum limit of Rs 2 lakh. The investment tenure is two years, during which the interest is compounded quarterly. This quarterly compounding ensures that the interest earnings grow steadily over time.

3. Account Ownership and Eligibility:
The scheme primarily caters to women, allowing them to open accounts either for themselves or on behalf of their minor daughters. To initiate the investment, one needs to obtain and fill out Form-1 from the nearest post office. It’s important to note that the account must be opened before 31 March 2025. Currently, the scheme offers a competitive interest rate of 7.50 percent, which is paid out to investors.

Interest Calculation and Returns:

1. Interest Calculation:
Under the Mahila Samman Savings Scheme, the interest is compounded quarterly, leading to a higher effective interest rate. The scheme’s advertised interest rate of 7.50 percent translates to an effective annual rate of 7.71 percent due to the quarterly compounding. This rate ensures that investors enjoy consistent growth in their savings over the investment period.

2. Potential Returns:
Let’s consider an example to illustrate the potential returns of the scheme. If an investor deposits Rs 2 lakh at the prevailing interest rate of 7.50 percent, they stand to earn an interest income of Rs 32,044 over a two-year tenure. This translates to a total return of 16.02 percent, showcasing the attractiveness of the scheme as a relatively risk-free investment option.

Withdrawal and Tax Implications:

1. Withdrawal Process:
The Mahila Samman Savings Scheme has a fixed tenure of two years from the date of deposit. After the maturity period, investors can withdraw their funds by submitting an application in Form-2 at the post office. Notably, investors are allowed to make a maximum withdrawal of up to 40 percent of the account balance if the application is made after one year from the account’s opening.

2. Tax Exemptions and Implications:
While the scheme does not provide tax benefits under Section 80C of the Income Tax Act, it presents an interesting tax landscape. Interest earned is taxable, and the interest income is added to the investor’s gross income and taxed based on their applicable tax slab. However, the scheme has a silver lining in terms of tax: if the interest income does not exceed Rs 40,000 in a financial year, no tax is levied at source.


The Mahila Samman Savings Scheme emerges as an enticing investment opportunity for women seeking secure and steady returns. While it lacks tax benefits, its flexible investment structure, quarterly compounding, and competitive interest rate make it an attractive proposition. This essay delved into the scheme’s features, eligibility criteria, interest calculation, potential returns, withdrawal process, and tax implications. By providing a comprehensive understanding of the scheme, women can make informed investment decisions that align with their financial goals and risk tolerance.

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