Sukanya Samriddhi Yojana(SSY) is a small deposit scheme for the girl child launched as a part of the ‘Beti Bachao Beti Padhao’ campaign. One of the reasons why this scheme has become popular is due to its tax benefit. It comes with a maximum tax benefit of Rs 1.5 lakh under section 80C of the Income-tax Act. Further, the interest accrued and maturity amount are exempt from tax.
1. Highest Interest Rate among all Small Savings Schemes offered by Govt of India
Sukanya Samriddhi Account will offer an interest rate of 9.1% for current financial year i.e. FY 2014-15. It is highest among all Small Savings Schemes. The rate of interest for this scheme will be market linked. The rate of interest will be 75 bps or 0.75% more than the average 10-year G-Sec yield for the previous year. The Interest Rate applicable for the Financial Year will be declared every year by the Govt of India. Interest will be compounded yearly i.e. will be credited on a yearly basis. It will be accrued on a monthly basis on the lowest balance between 5th and last day of the month.
2. Tax Savings
In order to encourage people to open Sukanya Samriddhi Account, Govt has exempted contribution to this account u/s 80C of the Income Tax Act, 1961. In all probability this scheme will be EEE i.e. exemption will also be available on interest income and at the time of withdrawal. It is under consideration of Department of Revenue (DOR). DOR will soon bring a legislative amendment to this effect. It will be a most tax efficient scheme.
3. Lock-in Period
In my opinion, this is the BEST Feature of this scheme. The maturity of account is 21 years from the date of opening of the account or Marriage of the Girl Child, Whichever is earlier. For Marriage, Girl should be of 18 years at the time of marriage. The operation of account is not permitted beyond the date of marriage.One Premature withdrawal is allowed on attaining the age of 18 years by girl child only if funds are required for Higher Education. Premature withdrawal is restricted to 50% of the balance at the end of preceding financial year. The deposits in the account can be made till completion of 14 years from the date of opening of the account through maturity is 21 years from the date of opening of the account.
4. Maturity Proceeds to be Paid to Girl Child
On maturity of Sukanya Samriddhi Account, the account balance along with accrued interest will be paid directly to the account holder i.e. Girl Child. It gives financial independence to Girl child which is currently missing in India.
5. Interest to be paid even after Maturity
Unlike other financial schemes where interest is not paid on maturity of the deposit / investment scheme. A unique feature of Sukanya Samriddhi Account is that even after maturity if the account is not closed by the account holder, Interest shall be payable in the account till final closure of the account.
6. Flexibility to operate Sukanya Samriddhi Account
The account can be opened with an initial deposit of Rs 1000 and thereafter any amount in multiple of Rs 100 can be deposited subject to the max limit of 1.5 lakh during the financial year. Every FY, a minimum sum of Rs 1000 should be deposited to keep account operative. In the case of two daughters i.e. two Sukanya Samriddhi Accounts, the cumulative contribution cannot exceed 1.5 Lakh during Financial Year.On attaining age of 10 years, a girl child can operate her account.
Opening of account
A parent or guardian can open only one account per girl child, and a maximum of two such bank accounts in the name of two girl children.In case twin girls are born on the second birth, or if the first birth itself results in the birth of three girl children, three bank accounts can be opened in the name of three girl children.
To open an account under the Sukanya Samriddhi Yojana, three documents are required:
1) Certificate of birth of the girl child:
provided by the hospital where the child is born or even a certificate provided by a government official.
2) Address proof of the parents or legal guardian of the girl child:
could be any one like passport, driving license, electricity or telephone bill, voter ID card, ration card or any other address proof issued by the Government of India.
3) Identity proof of the parents or legal guardian:
documents like PAN card, driving license, passport, voter ID card or matriculation certificate would be valid as an identity proof for opening the account.An account once opened can also be transferred anywhere in India.The role of legal guardian in the scheme would only come into the picture wherein both the parents of the girl child are dead, or are not capable of opening or running the account.
The girl child, in whose name the account has been opened, can operate the account on her own after she attains the age of 10 years if she wishes to do so.
Minimum deposit to be made under the scheme
The minimum deposit that needs to be made in the Sukanya Samriddhi Account every year was Rs 1,000 which has been slashed to Rs 250.The maximum amount that can be deposited in a year is Rs 1.5 lakh. There is no limit on the number of deposits either in a month or in a financial year.In case the required minimum annual deposit is not made by a parent or a guardian, the account will cease to be active. In such a situation, the account can be reactivated by paying a penalty of Rs 50 per year along with the minimum amount required for the deposit for that year.
Closing account prematurely
The account can be prematurely closed only under two conditions:
1. In case of the unfortunate death of the girl child (account holder), the parent or legal guardian can claim for the accumulated amount along with the interest incurred on the account. The balance would be immediately handed over to the nominee of the account.
2. The second condition under which the account can be prematurely closed is when the competent authorities feel and confirm that it is not possible for the depositor to carry forward the account or the contributions made towards the account are causing undue hardships to the depositor.
There is no third condition under which the account can be closed.
- Only girl children can avail the benefits of Sukanya Samriddhi Yojana saving scheme.
- To be eligible for opening a Sukanya Samriddhi Account, the maximum age of a girl child cannot be more than 10 years. However, a grace period of 1 year is allowed. For instance, a 10 years old girl can still hold a Sukanya Samriddhi Account, provided it is opened within a year of her turning 10 years of age.
- A proof of age of the accountholder has to be submitted at the time of applying for the savings scheme.