Team AckoJun 20, 2023
On January 22, 2015, the Indian Government introduced the Sukanya Samriddhi Yojana. It is an excellent investment option for parents or guardians that wish to financially secure their girl child's future. This article discusses the Sukanya Samriddhi Yojana in detail, along with its benefits, rules, and how you can make online payments. Read on to know more.
The Sukanya Samriddhi Yojana (SSY) is a government-backed small deposit programme for a girl child's needs. It was introduced as one of the parts of the ongoing Beti Bachao, Beti Padhao campaign. Section 80C of The Income Tax Act provides a benefit for the programme, and the returns are not taxable.
The interest rate for the Sukanya Samriddhi Yojana is established every quarter and is one of the highest available for investments. For FY 2022-2023, the current interest rate is 7.6% (and compounds annually). You can use the money invested in SSY to help the female child become financially secure in the future. Here is a table that lists the year-on-year interest rates for this government scheme.
|January to September 2018
|October to December 2018
|January to June 2019
|July to December 2019
|January to March 2020
|June to December 2020
The interest on Sukanya Samriddhi Yojana is calculated with the help of the following formula.
|A = P(1+r/n)^nt
P = Initial deposit amount
r = Rate of interest
n = Number of years the interest compounds
t = Number of years
A = Final amount at maturity
Consider Karishma has a 3-year-old daughter called Meenu. Karishma is a working woman, and she decides to invest a part of her income in the Sukanya Samriddhi Yojana for a better financial future for her daughter. If she deposits Rs 1,50,000 per year in the Sukanya Samriddhi Yojana account for fifteen years, her total investment will be Rs. 22,50,000. As per the interest rate of 7.6%, the maturity amount will be Rs. 65,93,071. This means Karishma’s daughter will earn an interest of Rs. 43,43,071 for the said investment.
Parents need to contribute to the Sukanya Samriddhi Yojana for fifteen years and then they can stop the deposits. The account will mature after 21 years from the initial deposit. The tenure of this scheme is 21 years from the first deposit or until the girl child marries after crossing the applicable legal age limit (currently, 18 years but is subject to changes) for the same. If fifteen years are completed before any of the two tenure criteria are met, then the girl will continue to receive the interest until the maturity date.
For instance, say a baby girl was born in the Sharma family and her parents decided to open the Sukanya Samriddhi Yojana account in the same year. They invested in this account for 15 years after which payments were not allowed as per the rules of this scheme. When the baby girl reached 21 years of age, the account matured and she received the entire amount (investment amount + compounded interest) that her parents invested.
The following are the eligibility criteria for this scheme.
The account holder must be an Indian national who is a resident of India at the time of account opening and must continue to be an Indian national until the account matures or is closed.
A girl child's parents or legal guardians can create a Sukanya Samriddhi Yojana account before she turns ten years old.
Each girl child is only allowed to have one account.
The account must be opened in the name of the girl child.
A maximum of two accounts can be opened by the guardian(s).
On submission of a certificate from a certified medical professional, a third account can only be created in the event of twin girls if any of the two births resulted in twins.
The key advantages of opening a Sukanya Samriddhi Yojana Account are listed below.
Sukanya Samriddhi Yojana account opening requires a minimal deposit of INR 250: The minimum amount you can deposit in this scheme is Rs. 250; it was Rs. 1,000 before July 5, 2018. The maximum deposit amount is Rs. 1.5 lakh. Note that a deposit must be made for 15 years without any breaks on these annual payments. Else a penalty of Rs. 50 will be applicable for each missed year. You can restart the account after paying the applicable penalty. Reactivation is permitted up to 15 years from the date of opening an account.
Helpful in saving money for your girl child's education costs: You may register an SSY Account for up to two daughters if you are the parents or legal guardians of a girl who is younger than 10 years old. You can withdraw 50% of the remaining balance after the daughter turns 18 to cover academic costs for higher education. It is necessary to submit the admissions-related documents.
Early withdrawal is permitted in certain situations. Premature withdrawal is permitted after five years of maintaining the Deposit Account if the bank or post office determines that maintaining the account is placing a financial hardship on the girl child. Even in cases when a parent or guardian has passed away, premature withdrawal is permitted.
Only 15 years' worth of deposits is required. After 15 years, you are free to stop making deposits until the account matures, which occurs 21 years after you open the account. The interest on the deposit will keep accruing. If the beneficiary marries after turning 18, you may also close the account early.
You will get the following tax benefits for creating a Sukanya Samriddhi Yojana account.
Interest on the deposit is not subject to tax. Every year, the interest is compounded.
Section 80C of the Income Tax Act allows for a deduction for deposits up to INR 1.5 lakh.
You don’t need to pay a tax on the amount you receive at the maturity of this scheme.
Here are the steps to open a Sukanya Samriddhi Yojana with a bank.
Step 1: Visit a nearby branch of a licensed bank and provide the necessary information on the Sukanya Samriddhi account form.
Step 2: Submit supporting documents and pay the first deposit amount. You can pay this via cash, cheque, or a demand draft.
Step 3: The bank will now handle your application and payment. They will also keep you updated on the process.
Another method is to open a Sukanya Samriddhi account at a post office. Here are the steps.
Visit the post office that is closest to you.
Fill out the post office account application form.
Collect all necessary documentation and attach it to the form.
Pay the initial deposit in cash, by demand draft, or by cheque.
The post office will review the application and issue a passbook when the account is opened.
Usually, the following documents are required to be submitted for opening an account under this scheme.
Sukanya Samriddhi Yojana application form
The birth certificate of the child, bearing her name on it
Parent’s/guardian’s latest photograph
Identity & address proof of the parent/legal guardian
Here is a step-by-step tutorial on using India Post Payments Bank (IPPB) to transfer funds between your bank and Sukanya Samriddhi accounts.
Add funds to your IPPB account using your bank account.
Select DOP Products.
Select Sukankya Samridhi account.
Write your DOP Customer ID followed by your Sukanya Samriddhi Account Number.
Select the payment amount.
After that, IPPB will notify about successful money transfer through the IPPB mobile application.
The following rules are applicable if you want to withdraw the amount prematurely.
The account may be prematurely closed if it has been open for at least five years and the bank determines that the female child will find it challenging to maintain the account owing to events like the death of the guardian or the child's illness.
You can request an early account closure if your daughter is getting married after attaining the applicable legal age. You must submit your application one month before or three months following the wedding, along with her age verification certificates. You can withdraw up to 50% of the remaining amount without incurring any tax obligations.
If a girl child dies, a clause allows for early account closure. A death certificate is required, and the guardian will get the whole balance of the Sukanya Samriddhi Account and any interest accrued until the month before the account was closed. There will be no taxes applied to early closure.
The account may be prematurely cancelled if the girl child's status changes, such as if she becomes a non-resident or a citizen of another nation. Within a month, as her guardian, you must submit the paperwork that shows her residency or citizenship status has changed.
You must submit a Transfer Request at the current bank or post office. Then they will make arrangements to send the original paperwork, including a certified copy of the account, the Account Opening Application, a sample signature, etc., to the new bank, along with a cheque or money order for the existing balance in the Sukanya Samriddhi Yojana account.
The following are some common questions and answers about the Sukanya Samriddhi Yojana.
PPF and SSY are both excellent investment plans, but they have some key differences. The PPF is a programme that enables depositors to receive interest free of tax. The Sukanya Samriddhi Yojana is a female child welfare programme that aids in securing a girl child's future.
Yes, investing in Sukanya Samriddhi Yojana is completely safe as this is a government-backed scheme. It is a part of the Beti Bachao, Beti Padhao campaign.
Currently, opening a Sukanya Samriddhi Yojana online account is not permitted. However, you can set the standing instructions online once the account has been opened following the submission of all required paperwork.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.
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