Sukanya Samridhhi Yojana (SSY) is a government-backed savings scheme in India that was introduced in 2015 by the Ministry of Finance as a part of the “Beti Bachao Beti Padhao” (Save Girl Child, Educate the Girl Child) campaign. Sukanya Samriddhi Yojana Scheme encourages parents to set aside funds for their daughter’s education and wedding expenses as it aims at the betterment of girl children in India.
Moreover, the SSY scheme is an ideal investment as it offers attractive tax advantages and interest rates.
Features of Sukanya Samriddhi Yojana Scheme
- Minimum Deposit: The minimum deposit to enter the Sukanya Samriddhi Yojana Post Office Scheme is INR 250 (which was previously INR 1000), and thereafter multiples of INR 100.
- Maximum Deposit: The maximum limit for deposits in the account is INR 1,50,000 per year.
- Mode of Deposit: Cash, cheque, demand draft, or online transfer of money are various deposit modes available.
- Account Operation: Guardians can operate the account till the girl child reaches the age of 18 years. However, after the girl child attains the age of 18 years, she has to operate the SSY account as a mandate.
- Duration of SSY: The guardians can open the SSY account anytime before the girl child attains turns 10 years. The maturity period is 21 years from opening the account or upon her marriage after the age of 18 years. However, guardians can deposit the amount only for a period of 15 years and the account shall earn interest till maturity regardless of whether any additional deposits after the period of 15 years.
- Tax Benefits: Investments are exempt from income tax under section 80C of the Income Tax Act
- If the minimum deposit per financial year is not done, the SSY account will be deactivated. However, it can be revived with a penalty of INR 50 per year along with the minimum amount required for a deposit for that year.
Sukanya Samriddhi Yojana Eligibility
The Sukanya Samridhhi Yojana Scheme eligibility criteria are as below:
- The parents or legal guardians can open the account in the name of the girl child anytime before she reaches the age of 10 years
- The girl child has to be a resident Indian
- A family can open up to 2 accounts for two girls
Note: One cannot open multiple Sukanya Samriddhi accounts for the same girl child.
Sukanya Samriddhi Yojana Interest Rate
Sukanya Samriddhi Yojana Interest Rate 2022-2023 for last quarter i.e., 1st January 2022 to 31st March 2023 is 7.6% p.a. Previosuly the interest rate was 8.4% p.a. The interest amount along with principle amount is paid on the maturity of the SSY account.
The govrnment revises the Sukanya Samriddhi Yojana Interest Rate on quarterly basis.
Sukanya Samriddhi Yojana Tax Benefits
The Sukanya Samridhhi Yojana tax benefits are as below:
The investments made under Sukanya Samriddhi Yojana fall under the EEE (Exempt, Exempt, Exempt) Category.
- This means that contribution up to INR 1.5 lakh is deductible under Section 80C, and
- The interest amount as well as the maturity amount or the withdrawal amount is exempt from tax.
How to open an Account for Sukanya Samriddhi Yojana?
Account can be opened at any of the authorized banks or at any post office. The form to open an account is available at all eligible bank branches and post office branches. One can fill out the form and submit the same along with the necessary documents and the deposit fee. SSY accounnts become active after verification process.
Documents required to open Sukanya Samriddhi Account:
- Account Opening Form
- Birth Certificate of Girl Child
- Identity Proof for both Girl Child & Parent or Legal Guardian
- Address Proof of depositor
SSY Withdrawal Rules
The following scenarios permit withdrawal:
- Marriage Expenses
- Higher education of girl child subject to she has completed her Xth Grade.
In both the cases, the girl child should have attained the age of 18 years.
The account holder can withdraw a maxmimum of 50% of the account balance in the previous year. Moreover, there are alternaives to withdraw money in lumpsum manner or in 5 installments as per the requirment.
SSY Closure Rules
Closure on Maturity
The maturity period is 21 years from opening the account or upon her marriage after the age of 18 years. Hence, upon maturity, in exchange of submission of an application along with proof of identity, and citizenship documents, the girl child receives the account balance including the interest amount.
The following scenarios permit pre-mature closure:
- Death of the girl child: In case of an unfortunate event like the death of the girl child, the guardians can receive the account balance along with interest upon producing the death certificate.
- Medical treatment in an event that a girl child develops a life-threatening illness.
- In case of marriage of the girl child on turning 18 years, a premature closure request can be submitted by submitting the age proof and other relevant documents.
- Death of the Guardian.
- By-default closure of SSY account in case of change in the citizenship status of the girl child: If the girl becomes an NRI, the account shall be deemed closed and a request can be submitted to the relevant place where the account is held for the withdrawal of the funds.
Transfer of SSY Account
One of the major benefits of SSY is the ease of convenience. One can transfer their SSY account from one part of the country to another without any hassle. One only needs to fill out and submit the transfer request form to the concerned post office or bank.
The Sukanya Samriddhi account will turn inactive in case the requirement of the minimum annual deposit of INR 250 is not met. However, you can revive the account by paying the penalty of INR 50 along with the minimum deposit amount.
The amount deposited in Sukanya Samriddhi account should not exceed INR 1.5 lakhs per year. However, the total number of deposits that you have made doesn’t matter either in a month or a financial year.
No, currently you are not allowed to avail of a loan against your SSY balance.
In case of unforeseen death of the depositor, the account is either closed and the accumulated amount is given to the family or girl child. Or, the account is kept running till the maturity period and the deposited amount continues to earn interest till the girl child attains the age of 21 years.
No, SSY scheme falls under EEE (Exempt, Exempt, Exempt) category. Hence, the maturity amount (inclusive of interest) is exemot from tax.
Currently, there are no provisions to apply for Sukanya Samriddhi Account online. Hence, you can visit Post Office or your bank brank and submit the application to open a SSY account.
Every parent wants to give their kids a solid financial future, and almost all include things like their children’s education and marriage on their list of financial objectives. One might not benefit from simply keeping money aside in a bank account because investments need to keep up with inflation. By getting started early, you give the power of compounding time to do its magic and help you build a sizable corpus.
In my opinion, these are some investment tools can be taken into account when you invest and save money for children:
Read more about Income Tax Deductions a Taxpayer can Avail - Learn by Quicko
Hope this helps.
Thanks for explaining the investment avenues.
Can you explain on the gifting and taxation done from parent to child perspective?
Sometimes, parents or relatives send gifts or cash to children during special occasions or festivals.
What is the tax implication of this?
According to the Income Tax Act, a gift from certain relatives is tax-free irrespective of the amount. Relatives include: Husband/wife, son/daughter (including stepchild and adopted child), father/mother (including step-father/mother), daughter-in-law/son-in-law, brother-in-law (and his wife), sister-in-law (and her husband) is tax-exempt.
Beyond this, if one receives any gift from non-relatives such as friends, step-brothers/sisters, nephews/nieces, and cousins, the value of the amount received is more than ₹50,000, then the entire amount is taxable.
Read more about Tax on Gift: Rules and Exemptions As per Income Tax Act in India | Quicko.
Hope this helps!
person “x” is having 4 parents .
2 biological parents and 2 adopted parents .
Are the assets received as gift/transfer from all the 4 parents to the person “x” ; tax-free in the hands of the receiver ?
As per the stated case, the gift received is tax-free in hands of the receiver.
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