Sukanya Samriddhi Yojana – A dependable option for your child?
Sukanya Samriddhi Yojana is an excellent initiative by the Government of India to promote the welfare of girl child. Through this article, we would like to make our readers more aware of the scheme particulars including details such as scheme eligibility, salient features, entry/exit criteria, taxation, partial and full withdrawal norms to name a few. As an investor, it is always beneficial to be aware of all investment options available to you as an investor so that you can take an adequate financial decision (if a particular scheme fits into your overall financial portfolio or not). As an investor, you should always know about the scheme inside out before taking any investment decision.
Let’s have a look at Sukanya Samriddhi Yojana in detail:
Launch Date: January 22, 2015
Who can open the account: A natural/ legal guardian on behalf of a girl child
Maximum number of accounts: Up to two girl children or three in case of twin girls as second birth or the first birth itself results in three girl children
Minimum and Maximum Amount of Deposit: Min.1000 of initial deposit with multiple of one hundred rupees thereafter with annual ceiling of Rs.150000 in a financial year
Tenure of the Deposit: 21 years from the date of opening of the account
The maximum period up to which deposits can be made: 14 years from the date of opening of the account.
Interest on Deposit: As notified by the GOI, compounded annually with an option for monthly interest pay-outs to be calculated on balance in completed thousands.(8.3% Per Annum (with effect from 1-07-2017)).
Tax Rebate: As applicable under section 80C of the IT Act, 1961. In the latest Finance Bill, the scheme has been extended Triple exempt benefits i.e. there will be no tax on the amount invested, amount earned as interest and amount withdrawn.
Premature Closure: Allowed in the event of death of the depositor or in cases of extreme compassionate grounds such as medical support in life-threatening diseases to be authorized by an order by the Central Government
Irregular Payment/ Revival of account: By payment of penalty of Rs.50 per year along with the minimum specified amount per year
Withdrawal: 50% of the balance lying in the account as at the end of the previous financial year for the purpose of higher education, marriage after attaining the age of 18 years.
The account can be opened by the natural or legal guardian in the name of a girl child from the birth of the girl child till she attains the age of 10 years
A depositor can open and operate only one account in the name of a girl child under the scheme rules.
Natural or legal guardian of a girl child can be allowed to open the account for two girl children only. The third account in the name of the girl child can be opened in the event of the birth of twin girls, as second birth or if the first birth itself results in three girl children.
Interest rate of 8.3%. The interest rate is regulated by Ministry of Finance from time to time. So please remember it is not fixed.
Minimum Rs. 1,000 can be invested in one financial year.
Maximum investment of Rs. 1,50,000 can be made in one financial year.
Deposits in an account can be made until completion of 14 years, from the date of opening of the account.
The account shall mature on completion of 21 years from the date of opening of the account, provided that where the marriage of the account holder takes place before completion of such period of 21 years, the operation of the account shall not be permitted beyond the date of her marriage.
SSY Account Opening Form
Birth Certificate of girl child
Identity proof (as per RBI KYC guidelines)
Residence proof (as per RBI KYC guidelines)
Tax Benefits and Withdrawal Facility:
Investment in Sukanya Samriddhi Yojana scheme is exempted from Income Tax under section 80C. The scheme offers Tax Benefit under TripleE regimen ie. Principal, interest, and outflow all are tax exempted.
To meet the financial requirements of the account holder for the purpose of higher education and marriage, account holder can avail partial withdrawal facility after attaining 18 years of age
Interest Rate Specifications:
The rate of interest 8.3% Per Annum (with effect from 1-07-2017), calculated on yearly basis, Yearly compounded.
Transfer Existing Sukanya Samriddhi Yojana Account
Customers can transfer their existing Sukanaya Samriddhi Yojana account held with other bank/ Post Office to other bank/Post Office.
Few important points:
Scheme Matures in 21 years or on Girl’s Marriage, whichever is earlier.
Do remember deposit is for first 14 years only. Post that you don’t need to deposit any account. Your account will keep on earning the interest rate applicable at that point of time year on year until the remaining 7 years or till it gets matured on daughter’s marriage.
Interest earned at present is not which will prolong in future too. So don’t assume your end corpus calculations based on current interest rate prevalent. From 9.1% in the financial year 2014-15, interest rate now is down to 8.3% in the financial year 2017-18.
Since the scheme is specifically for the welfare of the girl child, the government will want to keep the interest rate at an attractive level.
There are of course taxation benefits under Section 80C and also scheme comes under EEE category (Exempt-Exempt-Exempt).
There is a greater flexibility in depositing options under the scheme and also account can be transferred anywhere in India.
Investors must keep lock-in period in mind before investing. The scheme allows partial withdrawal after the child achieves the age of 18.
The interest earned by the scheme is expected to be better than PPF. So if you are using PPF as a medium to save for your girl child’s education, marriage, SSY can fetch you better returns over the long term.
Make sure you have a combination of equity and debt for your child’s education and marriage needs. Always keep inflation in mind while deciding on the end corpus you will require.
Do invest in the scheme with a purpose. Don’t make a case wherein you open the account and then end up making irregular contributions. Always having a focussed approach with your investments makes sense. Depending on the age of the child when you open the account, make sure you calculate the year she will need the corpus and what will be expected corpus you will achieve at (based on few assumptions such as average interest rates over the years).
In case you are investing in Sukanya Samriddhi Yojana or plan to invest, do share your views with our viewers.
Disclaimer: Above article is for investor education purpose only. There is no recommendation here for any financial product. Please consult your financial advisor before taking any financial decision.