The Sukanya Samriddhi Yojana (SSY) is a savings plan launched in 2015 as part of India’s “Beti Bachao Beti Padhao” campaign. Parents can invest in this scheme for their daughters’ education and wedding expenses. Not only does it promote the well-being of girl children but it also offers tax free savings. In this article we will explore that is sukanya samriddhi yojana tax free in India, Interest rate and how to apply for SSY.
Table of Contents
What is Sukanya Samriddhi Yojana?
Sukanya Samriddhi Yojana (SSY) is a government savings plan that helps parents secure funds for their daughters’ future expenses like education and marriage. The key features of SSY include:
- Eligibility: Parents of girl children below 10 years old can open an SSY account.
- Purpose: The funds can be used for the daughter’s higher education or if she marries after age 18 for her wedding expenses.
- Contributions: You can deposit as low as ₹250 or up to ₹5 lakh annually.
- Account Duration: The account matures after 21 years from the date of opening.
- Account Management: You can open an SSY account at post offices or authorized banks.
- Account Transfer: You can transfer the account to any location in India if needed.
- Tax Deductions: Deposits made into SSY are eligible for tax deductions under Section 80C of the Income Tax Act.
How to apply for Sukanya Samriddhi Yojana?
To open an account under the Sukanya Samriddhi Yojana scheme, follow these steps:
- Complete Form-1: Fill out the official registration form.
- Submit the Documents: Provide one of the following documents for Proof of Identity and Address for Guardian:
- Driving license
- Voter ID card
- Passport
- National Population Register letter with name and address details
- NREGA job card signed by a state government official
- Bring Birth Certificate for Daughter: Submit a copy of the official birth certificate of your daughter. Once you have gathered these documents, you can visit a designated bank or post office to complete the account opening process and begin saving tax-free for the future of your daughter.
Sukanya Samriddhi Yojana Interest Rate 2024
The government decides the interest rate for the Sukanya Samriddhi Yojana every quarter. For the first quarter of the fiscal year 2024-25 (April to June), the interest rate is set at 8.2% annually.
The calculation of Interest are based on the lowest account balance between the 5th and the last day of each month. Interest accrued during the financial year is added to the account at the end of the year. Fractional interest amounts less than a rupee are rounded up or down like amounts of 50 paise or more are rounded up to a full rupee, while amounts less than 50 paise are disregarded.
Regardless of account transfers made during the year, interest will be credited to the account at the end of the financial year.
Is Sukanya Samriddhi Yojana Tax Free?
Sukanya Samriddhi Yojana offers complete tax exemption under the EEE (Exempt, Exempt, Exempt) category. This means there is no tax on invested amounts, interest earned, or withdrawals made at maturity. This makes it an attractive savings scheme. If you ask us “Is Sukanya Samriddhi Yojana Tax Free”, we will provide you the list of below benefits on investing in the Sukanya Samriddhi Yojana:
- You can claim tax deductions on your investments up to Rs 1.5 lakhs u/s 80C.
- The interest you earn on your account is free from tax under Section 10.
- You do not need to pay any income tax on withdrawals whether you take the money at maturity or before.
Basically, this scheme helps you save for the future of your daughter while also saving you money on taxes.
Read also: Sukanya Samriddhi Yojana (SSY) – 3 Important Tax Benefits
Conclusion
If anyone question “is sukanya samriddhi yojana tax free”, now you can answer that Sukanya Samriddhi Yojana offers exemption from taxes, allowing you to allocate savings for the future of your daughter without the concern of reducing your earnings due to tax deductions. Its favorable tax advantages and emphasis on safeguarding your daughter’s aspirations make it an advantageous option. Therefore if you seek a convenient investment channel to ensure your daughter’s financial security in the years to come, Sukanya Samriddhi Yojana is a highly recommended choice.
Frequently Asked Questions (FAQ)
When you withdraw your maturity amount from the Sukanya Samriddhi Yojana (SSY) scheme, you will not have to pay taxes on it. This is because SSY falls under the EEE (Exempt, Exempt, Exempt) category which means the amount you take out when the scheme matures are all tax-free.
The Interest rate for 1st quarter of FY 2024-25 (April to June) has been set at 8.2% by government.