Section 10(11A) provides full tax exemption on withdrawals from a Sukanya Samriddhi Account (SSA), making it one of the most tax-efficient savings schemes for a girl child’s future.
Key Features of Sukanya Samriddhi Account (SSA)
- Eligibility:
- Only for girl children below 10 years(extended to 14 years in 2023)
- Maximum 2 accounts per family(exception for twins/triplets)
- Tax Benefits:
- Contributions: Deductible under Section 80C(up to ₹1.5 lakh/year)
- Interest: Fully exempt (no TDS, no tax on accrual)
- Maturity/Withdrawal: 100% tax-freeunder Section 10(11A)
- Withdrawal Rules:
- Partial withdrawal: Allowed after girl turns 18(for higher education/marriage)
- Full maturity: After 21 years(or marriage after 18)
- Interest Rate (2024-25):
- 2% p.a.(revised quarterly)
Examples of Tax Treatment Under Section 10(11A)
Example 1: Maturity Withdrawal (After 21 Years)
Scenario:
- Parents open an SSA for their daughter in 2024.
- Total deposits: ₹12 lakh (over 15 years)
- Maturity value (after 21 years): ₹35 lakh
Tax Treatment:
- Entire ₹35 lakh is tax-free(no tax on principal, interest, or maturity).
Example 2: Partial Withdrawal for Higher Education (After Age 18)
Scenario:
- Daughter turns 18, and parents withdraw ₹5 lakhfor her college fees.
Tax Treatment:
- ₹5 lakh is fully exempt(no tax on partial withdrawals).
Example 3: Premature Closure for Marriage (After Age 18)
Scenario:
- Account closed when daughter turns 20(for marriage).
- Withdrawal amount: ₹25 lakh
Tax Treatment:
- Full ₹25 lakh is tax-free(even if withdrawn before 21 years).
Example 4: Interest Income (Annual Accrual)
Scenario:
- Account earns ₹82,000 interestin a year (₹10 lakh balance × 8.2%).
Tax Treatment:
- ₹82,000 interest is tax-exempt(no clubbing with parent’s income).
Comparison with Other Child Savings Schemes
| FEATURE | SUKANYA SAMRIDDHI (SEC 10(11A)) | PPF (SEC 10(11)) | FD IN CHILD’S NAME |
| Tax on Withdrawal | Fully exempt | Fully exempt | Interest taxable (clubbed with parent’s income) |
| Max Investment | ₹1.5 lakh/year | ₹1.5 lakh/year | No limit |
| Lock-in Period | 21 years (or marriage after 18) | 15 years | Until maturity |
| Interest Rate (2024) | 8.2% | 7.1% | ~6-7% (bank-dependent) |
Key Takeaways
✅ 100% tax-free withdrawals (principal + interest)
👧 Best for long-term girl child savings (higher interest than PPF/FDs)
📈 Beats inflation (8.2% return, tax-free)
⚠ Early withdrawal allowed only after age 18 (for education/marriage)
