Investment in Sukanya Samriddhi Yojana for Tax Saving

Sukanya Samriddhi Account is a Government of India backed saving scheme targeted at the parents of girl children. The scheme encourages parents to build a fund for the future education and marriage expenses for their female child.

The Sukanya Samriddhi Yojana (SSY) was launched by PM Narendra Modi in 2015, as part of his Beti Bachao, Beti Padhao campaign.

The SSY is a savings scheme backed by the Centre for parents of a girl child, it provides a good interest rate along with several other benefits.

The Following is the historic rates of this government Scheme for the girl child:

Eligibility for SSY Account :

For the child (account holder)

• Only a girl child can avail the benefits of Sukanya Samriddhi Yojana saving scheme.
• The maximum age of this child should be 10 years. However, a grace period of 1 year is granted.

For the parents-

• Only biological parents or legal guardians of a girl child can open the account on the child’s behalf.
• One parent or legal guardian can open up to two accounts for their girl children.
• In case of twins or triplets the parent or legal guardian can open up to three accounts.
• The account holder has to be an Indian citizen and resident in India at the time of account opening and has to remain so until maturity or closure of account.

Opening of Sukanya Samriddhi Yojana Account

(1)       The account may be opened by one of the guardians in the name of a girl child, who has not attained the age of ten years as on the date of opening of the account.

(2)       Every account holder shall have a single account under this Scheme.

(3)       The application in Form-i for opening an account shall be accompanied by birth certificate of the girl child in whose name the account is to be opened, along with required documents of guardian.

(4)       An account under this Scheme may be opened for a maximum of two girl children in one family:

Provided that more than two accounts may be opened in a family if such children are born in the first or in the second order of birth or in both, on submission of an affidavit by the guardian supported with birth certificates of the twins/triplets regarding the birth of such multiple girl children in the first two orders of birth in a family:

Provided further that the above proviso shall not apply to girl child of the second order of birth. if the first order of birth in the family results in two or more surviving girl children.

Benefits of Investing in Sukanya Samriddhi Yojana

Sukanya Samriddhi Account is launched with the sole objective of financial planning for the marriage of Girl Child. Social Message is that Marriage or Education of a Girl Child is not a financial burden if parents plan well in advance.

Sukanya Samriddhi Yojana was introduced as part of Beti Bachao, Beti Padhao Yojana which provides with a range of benefits Some of the key benefits of this scheme for the benefits of the girl child are as follows:

• Sukanya Samriddhi Account provides a higher rate of interest than other Savings Plans that offer financial security for the girl child.
• Each financial year, the Government declares the applicable interest rate for that year, while the interest on your investments is compounded yearly.
• Your contributions towards the Sukanya Samriddhi Yojana for your daughter’s future are eligible for tax deductions under Section 80C of the Income-tax Act, 1961. Thus, you can claim tax deductions up to Rs 5 lakh invested in the scheme.
• Upon maturity, your account balance under the Sukanya Sarnriddhi Yojana, including the accumulated interest, will be paid directly to the girl child (or policyholder).
• Investing under Sukanya Samriddhi Yojana is that your accumulated savings continue to accrue compounding interest even after maturity until it is finally closed by the account holder.

Minimum and Maximum Amount of Investment

A Sukanya Samriddhi Account can be opened any time after the birth of a girl child till she turns 10, where you will have to deposit a minimum of Rs. 250. In subsequent years, a minimum of Rs. 250 and a maximum of Rs. 1.5 Lakh can be deposited during the ongoing financial year.

Thereafter the account will continue to earn interest till maturity.

Tenure of SSY Account

The account will attain maturity 21 years after it is created. At this time, the maturity amount will be payable to the person in whose name the account was made.

The payment period for SSY accounts is 15 years, while the maturity period of the account is a minimum of 21 years.

Taxation on SSY Scheme

SSY is a completely Exempt (EEE) Investment hence the principal amount invested, the interest earned as well as the maturity amount are all tax-exempt. Investments made in the SSY scheme are eligible for deductions under Section 80C, subject to a maximum cap of Rs. 1.5 lakh. The interest that accrues against this account which gets compounded annually is also exempt from tax. The proceeds received upon maturity/withdrawal are also exempt from income tax.

Partial Withdrawal from SSY Account

The account allows partial withdrawal. The Sukanya Samriddhi account holder can withdraw up to 50% of the total savings for fulfilling the purpose of marriage or higher education of his/her girl child. The Sukanya Samriddhi account allows partial withdrawal only after the girl reaches the age of 18.

Loan against SSY Account

Currently, no loans can be borrowed against this policy as per the existing rules and regulations. Any investment made towards the account cannot be held as security for loan purposes. This provision is currently non-existent for Sukanya Samriddhi Yojana.

Transfer of Sukanya Samriddhi Yojana account

The Sukanya Samriddhi Account can be transferred to anywhere in India. It works both ways – you can transfer it either form a post office to a bank or from a bank to a post office. The transfer can be carried out between listed commercial banks and Indian post offices.

Even contributions to Sukanya Samriddhi account can be done through this App. Write your SSA Account Number and then DOP Customer ID. Choose the installment amount. IPPB will then notify you of a successful payment transfer made through IPPB mobile application.