Sukanya Samriddhi Yojana (SSY) – 3 Important Tax Benefits

In line with the “Beti Bachao Beti Padhao” movement, Prime Minister Narendra Modi introduced the ‘Sukanya Samriddhi Yojana (SSY)’ on January 22, 2015, in Panipat, Haryana. This heartfelt initiative, also known as the ‘Girl Child Prosperity Scheme,’ is dedicated to securing a brighter future for our daughters. The Sukanya Samriddhi Yojana is a beacon of financial support, aiming to promote the well-being and education of girl children. It stands as a testament to the government’s commitment to empowering young girls, ensuring they have the means to thrive and succeed. Let’s understand through financeistic.

Sukanya Samriddhi Yojana

What is the Sukanya Samriddhi Yojana (SSY)?

To combat the alarming decline in the child sex ratio, the Indian government launched the Beti Bachao Beti Padhao (BBBP) campaign on January 22, 2015. This national initiative, spearheaded by the Ministries of Women and Child Development, Health and Family Welfare, and Human Resource Development, carries a crucial message: ‘Save girls, educate the girl child.’

Addressing the specific challenges faced by girls, the Sukanya Samriddhi Yojana (SSY) was introduced. This initiative focuses on securing a promising future for girls in India, aiming to assist parents in creating a fund for their daughter’s education and marriage expenses. The Sukanya Samriddhi Account is a key component of SSY, designed to address the pressing issues related to the well-being, education, and marriage of the girl child.

Sukanya Samriddhi Yojana age limit and maturity period

Opening a Sukanya Samriddhi Yojana Account

For a girl child, having just one Sukanya Samriddhi Yojana (SSY) account is the rule. You can kickstart this journey at any post office or authorized commercial bank branch, all the way from the birth of your little one up to when she turns 10.

Beneficiary Details for Sukanya Samriddhi Yojana

Any resident Indian girl child is eligible as a beneficiary under Sukanya Samriddhi Yojana, right from the moment the account is opened until maturity or closure.

Deposits Made Easy

The guardian takes the lead, making deposits and managing the account until the girl child reaches 18. Post that, it’s the girl’s turn. The minimum deposit is a pocket-friendly Rs. 250, now reduced from the previous Rs. 1,000. You can contribute in multiples of Rs. 50, with an annual maximum limit of Rs. 1,50,000 for up to 15 years. Cash, cheques, demand drafts, or online transfers – the choice is yours.

Interest on deposits

As of July 1, 2023, the interest rate stands at a competitive 8% per annum. Even if your account is in default (minimum Rs. 250 not deposited annually), it will earn interest until maturity, provided you regularize it within 15 years by paying a Rs. 50 penalty per default year. No interest accrues after the 21-year tenure or if the girl child becomes a non-citizen/non-resident. Deposits exceeding Rs. 1,50,000 annually won’t earn interest and can be withdrawn anytime.

Maturity period

The SSY matures in 21 years from opening or upon the girl’s marriage post turning 18. Contributions are required for only 15 years, yet the account continues to earn interest until maturity, even with no further deposits. Start early, invest wisely, secure her future!

Benefits of Sukanya Samriddhi Yojana (SSY)

The core objective of the Sukanya Samriddhi Yojana (SSY) program, launched under the Beti Bachao Beti Padhao campaign, is to safeguard the future of girl children.

Affordable Contributions

Ensure a bright future for your girl child with Sukanya Samriddhi Yojana (SSY). Keep the account active by maintaining a minimum balance of Rs. 250 per fiscal year. The flexibility is for everyone, as you can deposit up to Rs. 1.5 lakh annually. Even if you miss a payment, the account stays active, with a modest Rs. 50 penalty on the minimum payment of Rs. 250.

Education Made Easy

SSY supports your daughter’s education expenses. Withdraw 50% of the previous year’s closing balance for educational needs. Just provide your girl child’s admission documents to avail of this benefit.

Attractive Interest Rates

Enjoy high-interest rates with Sukanya Samriddhi Yojana, surpassing many government-backed schemes. Currently set at 8% per annum, this ensures your investment grows significantly.

Guaranteed Returns

Rest easy knowing Sukanya Samriddhi Yojana is a government-backed initiative, assuring guaranteed returns upon maturity. Secure your daughter’s financial future with confidence.

Effortless Transfers

Move your Sukanya Samriddhi Yojana account seamlessly anywhere in India – from a bank to a post office or vice versa. Experience the ease of managing your daughter’s future, hassle-free.

Tax benefits of Sukanya Samriddhi Yojana

Investing in the Sukanya Samriddhi Yojana (SSY) not only secures your girl child’s future but also comes with attractive tax advantages:

Smart Savings

Your SSY investments, capped at Rs 1.5 lakh, qualify for deductions under Section 80C. It’s a smart way to grow your savings while enjoying tax benefits.

Tax-Free Growth

The interest earned annually on your SSY account, compounded for maximum growth, is entirely tax-free under Section 10 of the Income Tax Act. Watch your investment flourish without worrying about taxes.

Maturity Windfall

When your SSY account matures or you make a withdrawal, rest assured that the proceeds are exempt from income tax. Enjoy the full benefits of your investment without any tax implications.

Sukanya Samriddhi Yojana interest rate 2023

Here’s a quick peek at the interest rates in recent quarters for Sukanya Samriddhi Yojana:

2nd Quarter FY 2023-2024 (1 July 2023 – 30 September 2023): The interest rate stands at a lucrative 8%, offering a competitive edge.

1st Quarter FY 2023-2024 (1 April 2023 – 31 June 2023): An increase to 8% in this quarter signals even more favourable returns for investors.

4th Quarter FY 2022-2023 (1 January 2023 – 31 March 2023): The previous quarter boasted a solid 7.6% interest rate.

1st Quarter FY 2022-2023 (1 April 2022 – 30 June 2022): The starting quarter of the previous fiscal year also featured a 7.6% interest rate.

Remember, in case of an ‘Account under default’ (where the minimum Rs 250 hasn’t been deposited), interest will be earned on the post savings bank account. The exception is if the default is due to the unfortunate circumstance of the guardian’s death, who initially opened the account. Stay informed, maximize your returns, and secure your financial journey with Sukanya Samriddhi Yojana.

Calculation of Sukanya Samriddhi Yojana interest

When it comes to mapping out your investment journey with the Sukanya Samriddhi Yojana (SSY), the handy Sukanya Samriddhi Yojana Calculator comes to the rescue. Wondering how the interest is calculated under this scheme? Let’s break it down. The magic happens with a simple formula: A = P (1 + r/n)^(n*t) Here’s what each element means:
  • P (Initial Deposit): This is where you start—the amount you initially put into the SSY account.
  • n (Compounding Frequency): It represents how often the interest is compounded annually.
  • r (Interest Rate): The rate at which your investment grows.
  • t (Number of Years): The duration of your investment journey.
  • A (Total Amount at Maturity): The result of this formula gives you the total amount you’ll have at the end of your investment tenure.
Remember, the lowest balance between the fifth and last days of the month is used to calculate interest, and it’s credited at the end of each financial year. Use this formula to estimate your SSY earnings and embark on a financially secure future.

Sukanya Samriddhi Yojana eligibility

Securing your girl child’s future through Sukanya Samriddhi Yojana (SSY) comes with straightforward eligibility criteria:
  1. Account Opener: Only parents or legal guardians are eligible to open an SSY account for a girl child.
  2. Age Requirement: The girl child must be a resident Indian and under the age of 10 when the account is opened.
  3. One Account per Girl: A unique feature ensures that only one SSY account can be opened for a girl child.
  4. Family Limitation: A family can open a maximum of two SSY accounts, one for each girl child.
  5. Special Cases: Special circumstances allow for more than two accounts in specific scenarios:
    • If a girl child is born before the birth of twin or triplet girls, or if triplets are born first, then a third account can be opened.
    • However, if a girl child is born after the birth of twin or triplet girls, a third SSY account cannot be initiated.

How to open a Sukanya Samriddhi Yojana account in a post office or Bank?

Opening a Sukanya Samriddhi Yojana (SSY) account is a straightforward process, providing a secure future for your girl child. Choose between a Post Office branch or a participating bank for added convenience. Here’s a simple guide to get started:
  1. Visit the bank or post office branch where you wish to open the SSY account.
  2. Complete the application form (Form-1) with all the necessary details and provide supporting documentation.
  3. Make the initial deposit using a demand draft, check, or cash. Deposits between Rs. 250 and Rs. 1.5 lakh are accepted.
  4. The bank or post office will process your application and payment.
  5. Once processed, your SSY account will be officially opened, and you’ll be provided with a passbook to keep track of your account details.

How to open a Sukanya Samriddhi Yojana account Online?

To make online payments to your Sukanya Samriddhi Yojana (SSY) account, start by downloading the IPPB app on your smartphone. This user-friendly app allows you to set up automatic payments for hassle-free online deposits into your SSY account. Here’s a quick guide:
  1. Transfer funds from your bank account to your IPPB account.
  2. Open the IPPB app, navigate to DOP Products, and select Sukanya Samriddhi Yojana account.
  3. Enter your DOP client ID and SSY account number.
  4. Choose the desired payment amount and installment duration.
  5. Once the payment setup is successful, IPPB will notify you.
  6. Receive notifications every time the app transfers money, keeping you informed about your SSY account transactions.

Documents required for Sukanya Samriddhi Yojana

To complete your Sukanya Samriddhi Yojana (SSY) application process, head over to the post office or bank branch where you initially submitted your application. Here, you’ll need to submit physical copies of the following documents:
  1. Birth certificate of the girl child
  2. Identity and address proof of the guardian
  3. Medical certificate for proof of birth in the case of multiple girl children on a single order of birth
  4. Additional KYC documents like Aadhaar card, Voters ID, etc.
  5. Any other documents specified by the post office or banks

Sukanya Samriddhi Yojana closure rules

Upon closure of the Sukanya Samriddhi Yojana (SSY) account, the girl child can withdraw the entire amount, including interest, once the account’s duration is complete. To facilitate this withdrawal, the following documents are required:
  • Withdrawal application form
  • Proof of identity
  • Proof of address
  • Citizenship documents.
In the event that the girl child has crossed the age of eighteen and completed the tenth grade, she can make withdrawals for higher education expenses. However, the withdrawn amount must be utilized for covering admission fees and additional associated costs during her admission process. When requesting a withdrawal, supporting documents such as fee receipts and university or college admission details must be submitted. The maximum withdrawal allowable is 50% of the total amount from the previous year, and this sum can be withdrawn either in full or in five equal instalments. This flexible approach ensures that the Sukanya Samriddhi Yojana serves as a valuable resource for the girl child’s educational pursuits.

Sukanya Samriddhi Yojana withdrawal rules

Closure on Maturity

The Sukanya Samriddhi Yojana (SSY) account matures after 21 years of the girl child’s completion. To receive the accumulated balance, including interest, the child must submit an application along with proof of identity, residence, and citizenship documents.

Premature Closure

Premature closure is permitted under specific circumstances:

  • If the girl child intends to marry after turning 18, an application can be submitted one month before to three months after the wedding, accompanied by age proof documents.
  • In the unfortunate event of the girl child’s death, the guardian can claim the balance along with interest by providing the death certificate.
  • Medical treatment for life-threatening diseases of the girl child or in the event of the guardian’s death allows for premature closure.
  • A change in the status of the girl child (non-resident or non-citizen) prompts deemed closure if communicated within one month.
  • After 5 years from SSY opening, closure is possible if the post office or bank determines undue hardship, such as the death of the guardian or medical reasons.

For any other reasons, closing the SSY account is allowed at any time after opening, but the deposit will earn the post office savings bank interest rate.

Frequently Asked Questions (FAQ)

When the minimum required payment of Rs. 250 is not met in a financial year, the SSY account is considered in default. However, with a simple fine of Rs. 50, the account can be swiftly restored to its active status.

If a deposit surpasses Rs. 1.5 lakh, no interest is accrued. The excess amount remains available for withdrawal, providing flexibility to the depositor.

The Sukanya Samriddhi Yojana account stays active for a minimum of 21 years for the girl child, with a payment duration of 15 years.

Certainly! While Sukanya Samriddhi Yojana caters to girls, the Personal Provident Fund (PPF) is designed for long-term savings, especially for retirement. Since they serve distinct financial goals, participating in both schemes simultaneously is entirely feasible.

There’s no specific deadline to avail the Sukanya Samriddhi Scheme. However, for taxation purposes, it aligns with conventional tax filing deadlines.

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