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A Comprehensive Guide to Sukanya Samriddhi Yojana

Know Features, Eligibility Criteria and Tax Benefits of Sukanya Samriddhi Yojana

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In 2015, an initiative named "Beti Bachao Beti Padhao" was introduced by the Indian Government to help ensure well-being of the girl child. As part of this initiative, the government also introduced a new investment option - Sukanya Samriddhi Yojana (SSY).

The Sukanya Samriddhi Yojana account can be opened by the parent or guardian of a girl child. By methodically depositing a percentage of their savings, the parents of a female child can safeguard the child’s financial future through this investment. Read on to know details of Sukanya Samriddhi Yojana including its interest rate, key features, benefits and much more.

What is Sukanya Samriddhi Yojana (SSY)?

Sukanya Samriddhi Yojana or SSY is an investment option that parents of a girl child can avail to earn guaranteed returns for a girl's future education and marriage. This government-backed scheme can be availed through leading banks in India or the India Post Office. The current interest rate offered for Sukanya Sammriddhi Yojana account is 7.6% p.a. which is applicable till September 2022 and is reviewed quarterly.

Apart from offering one of the highest interest rates among small savings scheme, SSY investments also qualify for EEE (exempt-exempt-exempt) status. So, the principal amount invested, interest earned and maturity amount are all tax-free.   

When Can a Sukanya Samriddhi Account be Opened?

With a minimum contribution of ₹250, a Sukanya Samriddhi Account can be started at any time after a girl child is born but before she is 10 years old. Currently, Sukanya Samriddhi Yojana (SSY) account can be opened at any India Post office or at leading banks across India. The primary account holder of the SSY account will be the girl child’s parent or guardian with the minor girl child as the joint holder. Under current rules, only a single SSY account is allowed per girl child. Additionally, parents can open a maximum of 2 SSY accounts for 2 girl children.  

As per Section 80C of the Income Tax Act of 1961, the parent making SSY investment can avail tax deduction benefit of up to ₹1.5 lakh in a financial year. The maximum investment allowed annually in a Sukanya Samriddhi Yojana Account is ₹1.5 lakh either as a lump sum investment or through multiple transactions.

The SSY account matures and can be closed either when the girl child attains the age of 21 years or marries after she is 18 years old. Sukanya Samriddhi Yojana account also allows partial withdrawal of up to 50% of the account balance to cover the cost of a girl child's higher education after passing 10th standard or attaining the age of 18 years.

Sukanya Samriddhi Yojana - Max Life Insurance

Key Features of a Sukanya Samriddhi Account

Here are some key features of a Sukanya Samriddhi Account that you need to keep in mind before opening one for a girl child:

  • One may only open and maintain one Sukanya Samriddhi Yojana profile for a girl child. It is prohibited to open a second account for the same girl.
  • The legal guardians or parents of a girl child can open a SSY account before the child attains 10 years of age.
  • Parents or guardians of girl children are allowed to open a maximum of 2 SSY accounts for 2 girl children.
  • A minimum of Rs. 250 has to be deposited into the account every financial year to ensure that the account is maintained in good standing.
  • In case the minimum deposit is not made for any financial year, reactivation of SSY account is allowed provided a penalty of Rs. 50 along with the minimum Rs. 250 deposit per year of default is made.    
  • Premature closure of the SSY account and withdrawal of complete account balance is allowed in the event of the girl child’s or guardian/parent’s death or to cover medical expenses of the girl child’s or parent’s critical illness.
  • Premature closure of Sukanya Samriddhi Account is allowed only after completion of 5 years from the date of account opening. 

What are the Current and Historic Interest Rates of Sukanya Samriddhi Yojana?

As SSY is a government-backed scheme, the interest rate of Sukanya Samriddhi investments is decided by the Ministry of Finance, Government of India. The applicable interest rate for Sukanya Samriddhi Deposits is liable to be revised every quarter just like PPF interest rates and other government-backed scheme rates. The current interest rate for Sukanya Samriddhi Yojana is 7.6% p.a. which is applicable till September 2022.

Below table shows the historic interest rates of Sukanya Samriddhi Yojana (SSY): 

Time Period

Interest Rate (p.a)

April 2020 to Current

7.6%

July 2019 – March 2020

8.4%

October 2018 – June 2019

8.5%

January 2018 – September 2018

8.1%

July 2017 – December 2017

8.3%

April 2017 – June 2017

8.4%

October 2016 – March 2017

8.5%

April 2016 – September 2016

8.6%

What are the Necessary Documents for Opening a Sukanya Samriddhi Account?

Here is a list of the required documentation that must be provided while opening a Sukanya Samriddhi Account for a girl child:

  • The completely filled out account opening form for the Sukanya Samriddhi Account.
  • The girl child's birth certificate / Baal Aadhaar.
  • The parent/guardian of girl child must provide copies of Govt. Issued ID proof and applicable address proof.
  • PAN card of parent/guardian opening the account on behalf of girl child
  • Passport-size photograph of parent/primary caregiver opening Sukanya Samriddhi Account on behalf of girl child  

Apart from the above documents, the bank or post office may require submission of additional documents like salary slip of parent/guardian of girl child on a case to case basis.

What is the Eligibility Criteria for Sukanya Samriddhi Account?

  • The eligibility criteria for Sukanya Samriddhi Account are as follows:
  • SSY Account opening is allowed from the date of birth of girl child till she turns 10 years old.
  • A girl child is allowed only one Sukanya Samriddhi Yojana account.
  • A limitation of 2 girl children may have accounts opened by the legal or natural caregiver.
  • Upon presentation of a certificate from qualified medical officials, a third account may only be formed in the case of twin girls in second birth or three girl children from a single birth.
  • The parent opening the SSY account on behalf of the girl child must be an Indian citizen and an Indian resident at the time of account opening.

How to Open a Sukanya Samriddhi Account?

To open an account under the Sukanya Samriddhi Yojana, here are the steps that need to be followed:

Step 1

To begin with, you need to get hold of a Sukanya Samriddhi Yojana Account form and fill it out.

Step 2

Next, you need to submit the filled-out SSY application at an authorized bank branch or at the nearby India Post office.

Step 3

Include any necessary supporting documentation such as required KYC documentation with your application for Sukanya Samriddhi Yojana account.

Step 4

An initial deposit between ₹250 and ₹1.5 lakh needs to be made at the time of account opening.

Step 5

Once the Sukanya Samriddhi account is opened, you will receive a passbook to keep track of all your transactions.

What are the Benefits of Sukanya Samriddhi Yojana?

Here are some major benefits of the Sukanya Samriddhi Yojana account:

  • You can open an SSY account with a deposit as small as ₹250. The maximum deposit allowed for a financial year is up to ₹1.5 lakh
  • The deposit tenure is for a period of 15 years. While contributions can be made even after completion of this 15-year period, it is not mandatory
  • The rate of interest is quite attractive and currently stands at 7.6% p.a. (till Q3 2022) and the interest is compounded annually.
  • You can make a premature withdrawal under certain special or in the case of specific emergency circumstances.
  • This account helps you save money for your girl child's future education and marriage requirements.
  • Sukanya Samriddhi Yojana account qualifies for EEE (Exempt Exempt Exempt) tax benefit. So investments made, interest earned and maturity amount are all tax-free

What Happens if the Minimum Amount is not Deposited in the SSY account?

A Sukanya Samriddhi account could become a default account if the required contribution is not made within a fiscal year. By making the requisite payment of ₹250 plus a fine of ₹50 for every year of failure, the account may be reactivated prior to the expiry of the 15-year tenure. The whole deposit, as well as those made before the date of default, will accrue a rate of interest as per the post office savings account if the fine is unpaid.

FAQs

1. What does SSY stand for?

SSY stands for Sukanya Samriddhi Yojana. The Indian government established this investment program to help people save money for a girl's future education, and marriage.

2. When can SSY be opened?

With a minimum contribution of ₹250, a Sukanya Samriddhi Account can be started at any time after a girl child is born until she turns ten. Any bank or postal service may serve as the home for this arrangement.

3. Can two SSY accounts be opened for a girl child?

No, one may only open and maintain one Sukanya Samriddhi Yojana profile for a girl child. It is prohibited to open a second account for the same girl.

4. How much money can be deposited in an SSY account?

In a single financial year, a minimum deposit of ₹250, and a maximum deposit of up to ₹1.5 lakh can be deposited in a Sukanya Samriddhi Account.

5. What are the tax benefits of an SSY account?

As per Section 80C of the Income Tax Act of 1961 in India, a tax redemption of up to a maximum of ₹1.5 lakh can be availed each year. The interest that is accrued on the deposits made, and the maturity payout are also free of tax.

6. What happens if excess money is deposited in an SSY account?

If the money deposited is more than ₹1.5 lakh in a financial year, no interest is generated on that excess. Moreover, the excess amount will be returned to the Sukanya Samriddhi Yojana account holder.

7. What are the eligibility criteria for a tax deduction in SSY account?

The parent or guardian of the girl child is eligible for opening an SSY account only if the girl is below the age of 10 years. In case the girl child is above the age of 10, the parents cannot open an account.

Sources:

https://economictimes.indiatimes.com/wealth/tax/tax-saving-6-fixed-income-investments-to-cut-your-tax-outgo/tax-saving-under-section-80c/slideshow/74299656.cms

https://www.nsiindia.gov.in/InternalPage.aspx?Id_Pk=171

https://www.nsiindia.gov.in/InternalPage.aspx?Id_Pk=132

https://www.axisbank.com/retail/accounts/sukanya-samriddhi-account/eligibility

https://transformingindia.mygov.in/scheme/sukanya-samriddhi-yojana/

ARN No : Sept22/Bg/12

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