The Sukanya Samriddhi Yojana (SSY) was developed as a part of the government’s ‘Beti Bachao, Beti Padhao’ campaign. The scheme aims to secure and improve the life of the girl child. It offers quite a few benefits, including fixed return and tax benefits. This article explains the Sukanya Samriddhi Yojana in detail, including its features, eligibility criteria, and how to invest.
What is Sukanya Samriddhi Yojana?
The Sukanya Samriddhi Yojana (SSY) is an initiative launched in 2015 by the government. It is regulated jointly by the Ministry of Women and Child Development, the Ministry of Health and Family Welfare, and the Ministry of Human Resource Development.
The scheme tackles a major problem that is faced by a girl child’s parents – education and marriage. Through this scheme, the government aims to provide a means for the parents to fund a girl child’s education and marriage expenses.
Being a government-backed scheme, it is low in risk and also offers fixed returns in the form of interest. Parents of a girl child aged 0-10 years can invest in this scheme. Only one account per girl child and a maximum of 2 SSY accounts per family are allowed. The scheme pays a fixed interest of 8.2% per annum, which is compounded annually. The interest rate is subject to revision by the Ministry of Finance every quarter.
SSY matures when the girl child turns 21 years old. Until then, the investment you made will be locked in. You can also partially withdraw (up to 50%) the investment proceeds when the girl turns 18 years old.
The investment, interest, and maturity proceeds are completely tax-free. Therefore, when you invest in this scheme, you can claim a deduction of a maximum of Rs 1.5 lakhs per annum under Section 80C of the Income Tax Act, 1961.
How Does Sukanya Samriddhi Yojana Work?
SSY is a government scheme you can invest in through any post office or authorized bank. Once you open an SSY account, you must invest a minimum of Rs 250 every year until the girl child turns 15 years old to keep the account active. After the girl child turns 15, you need not invest. The amount you contributed previously will accumulate interest, which will be paid during maturity when the girl child turns 21.
Features and Benefits of Sukanya Samriddhi Yojana
The following are the features and benefits of Sukanya Samriddhi Yojana.
Deposits
The guardian can deposit and manage the account until the girl child turns 18. After reaching 18 years of age, the girl child must operate the SSY account. The minimum deposit for an SSY account is Rs 250 (formerly Rs 1,000), and a maximum annual deposit of Rs 1.5 lakh for up to 15 years. Deposits can be made through cash, cheque, demand draft, or online transfer.
Sukanya Samriddhi Yojana Interest Rate
The current interest rate is at 8.2% p.a. for the January to March 2024 quarter , one of the highest among small savings schemes. The interest is revised every quarter by the Ministry of Finance. ‘Accounts under default’ (not meeting the minimum deposit requirement) will accrue interest until the account’s maturity date. Defaulted accounts can be regularised within 15 years of opening, with a penalty of Rs 50 per default year.
No interest is payable after the 21-year tenure or if the girl child becomes a non-citizen or non-resident of India. Also, deposits exceeding the Rs 1.5 lakh cap won’t earn interest and can be withdrawn at any time by the depositor.
Maturity Period of SSY
The SSY matures 21 years after the account opening or the girl’s marriage after turning 18. Contributions are required for only 15 years. The account will continue to earn interest until maturity, even without additional deposits.
Tax Benefits
Investments in the SSY scheme qualify for deductions under Section 80C, with a maximum limit of Rs 1.5 lakh. The interest earned on this account is also tax-exempt under Section 10 of the Income Tax Act. Additionally, the proceeds obtained upon maturity or withdrawal are exempt from income tax.
It is important to note that this tax exemption is available only if you opt for the old tax regime. No tax deductions are available under the new tax regime (announced in Budget 2023).
Premature and Partial Withdrawals
For premature withdrawals from SSY, certain conditions must be met, such as covering marriage expenses or funding the higher education of the girl child after she reaches 18 years.
Education
Withdrawals can be initiated from the account, amounting to 50% of the balance at the end of the previous fiscal year, once the girl is above 18 years old or has completed the 10th standard. This withdrawal is intended for meeting educational expenses like fees and supporting documents, such as a confirmed offer of admission or a fee slip, must accompany the withdrawal application.
A maximum of one withdrawal is permitted per year, either as a lump sum or in five instalments. This is subject to the specified ceiling and the actual requirement for fees or other charges.
Marriage
Premature or partial withdrawals of the SSY corpus are allowed when the girl child reaches the age of 18, specifically to fund her marriage. The application for withdrawal, accompanied by proof of the girl child’s age, must be submitted one month before the wedding.
Account Transfer
Transfer the SSY account from any post office to a bank or vice versa anywhere in India.
Eligibility Criteria to Invest in SSY
SSY is a scheme for girl children only. Thus, not everyone can open an SSY account. The following are the eligibility criteria:
- The girl must be under the age of ten.
- Either the guardian or one of the parents is eligible to open an account for the girl.
- Each girl is limited to one account.
- A family is allowed to open a maximum of two Sukanya Samriddhi Yojana (SSY) accounts, securing the future of two girls through this scheme.
- In the event of having twin girls, the guardian or parents have the option to open a third account.
How to invest in Sukanya Samriddhi Yojana (SSY)?
You can open an SSY account through a post office or a participating bank. If your existing savings account is with one of the participating banks, choosing that bank for the SSY account is convenient. You can obtain the SSY Account Opening Application Form from the respective banks’ websites. Duly fill out the form and submit it to the participating bank to successfully open your SSY account. The participating banks include but are not restricted to the following:
- Axis Bank
- Bank of Baroda
- Bank of India
- Bank of Maharashtra
- Canara Bank
- Central Bank of India
- Dena Bank
- ICICI Bank
- IDBI Bank
- Indian Bank
- Indian Overseas Bank
- Punjab and Sind Bank
- Punjab National Bank
- State Bank of India
- UCO Bank
- Union Bank of India
Documents Required for Opening SSY Account
The following are the documents required for opening an SSY account:
- SSY application form
- Girl child’s birth certificate
- Medical certificate if more than one girl child is born in the same pregnancy.
- Applicant’s address proof – parent or guardian
- Applicant’s Photo ID – parent or guardian
- KYC proofs – Aadhar card, PAN, Voter ID, and Passport
- Any other documents as may be requested by the post office or bank
Conclusion
SSY is one of the best investment schemes that allows you to build a sizable corpus for your girl child, which can be used for her education and marriage. Since the scheme comes with a sovereign guarantee, it has low risk. Moreover, you can avail tax benefits by investing in this scheme. By investing a small portion of your income in this scheme every year, you can accumulate wealth through compounding, which can support her dreams.
Frequently Asked Questions (FAQs)
Can parents withdraw money from the Sukanya Samriddhi account?
Yes, parents can withdraw funds from the Sukanya Samriddhi account. However, the girl child must have reached the age of 18 before any withdrawals can be made. Additionally, parents are allowed to withdraw only 50% of the total corpus for the specific purposes of the child’s higher education or marriage.
Who can open Sukanya Samriddhi Scheme?
SSY account can be opened in the name of the girl child only. Parents or guardians can open the account on behalf of their girl child.
What is the maximum age limit for the Sukanya Samriddhi Yojana?
The maximum age limit to open an SSY account is before the girl child turns ten years old.
Can non-residents open Sukanya Samriddhi Yojana?
No, non-resident Indians cannot open an SSY account. However, upon returning to India and when you become a resident Indian, you can open an SSY account.
Can I withdraw the Sukanya Samriddhi Yojana before maturity?
Yes, premature withdrawals are permitted from your SSY account. However, such withdrawals can only be made after the completion of 5 years from the date of account opening. Additionally, specific conditions must be fulfilled before initiating a premature withdrawal. Such withdrawals are allowed in the unfortunate events of the account holder’s death or on extreme compassionate grounds. Furthermore, premature withdrawals are permissible in cases of life-threatening diseases affecting the account holder or in the event of the guardian who operated the account passing away.
Can I shift my SSY account from one bank to another?
Yes, you can easily transfer your Sukanya Samriddhi account from one bank to another.
What is the minimum amount required to open an SSY Account?
Rs 250 is the minimum amount required to open an SSY account.
What is the maximum deposit amount in an SSY Account?
Rs 1.5 lakhs is the maximum amount required to open an SSY Account.
What is the maturity period of an SSY Account?
The SSY account matures either after 21 years from the date of opening or upon the marriage of the girl child when she reaches 18 years or more. To facilitate this, the account holder needs to provide evidence of the girl child’s age by submitting a birth certificate.
