The Sukanya Samriddhi Yojana (SSY), a part of Prime Minister Narendra Modi’s Beti Bachao Beti Padhao initiative, has gained popularity among families with female children.
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If you are planning to open a Sukanya Samriddhi Yojana or SSY deposit, then there are some things that you should be aware of:
You can open an SSY account with a minimum deposit of Rs 250, and the maximum deposit allowed is Rs 1.5 lakh. It is compulsory to make yearly deposits for 15 years from the account’s opening date. Failure to do so results in the account going into ‘Account under default.’ However, you can reactivate it by paying a Rs 50 fine per defaulted year, and this can be done within 15 years from the account’s opening.
Maturity and Interest: After 15 years, you need not make further deposits until the account matures, which occurs 21 years from the account’s opening. During this time, the account continues to earn interest.
How much should you save monthly in SSY to get Rs 50 lakh?
According to an ET analysis, if you wish to accumulate approximately Rs 50 lakh by the time your daughter reaches 21, you should aim for an annual deposit of Rs 1,11,400, assuming an 8% interest rate.
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This translates to a monthly commitment of Rs 9,283 or a daily contribution of Rs 305. The calculation considers a 5-year-old girl, with the account maturing in 2044.
The SSY calculator estimates the maturity value based on the input amount. The scheme matures after 21 years from the account’s opening. It assumes annual deposits in the chosen amount for the first 15 years, with no obligation to deposit in the subsequent six years. During this period, interest continues to accumulate.
Triple Tax Benefits: Besides the financial aspects, SSY offers significant tax advantages:
(A) Deposits up to Rs 1.5 lakh qualify for a deduction under Section 80C of the Income Tax Act.
(B) The interest earned on the deposit is tax-free and compounded annually.
(C) The maturity amount is also tax-free.
Is a premature withdrawal allowed in a SSY account?
In specific situations, premature withdrawal is permitted.
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After five years, withdrawals can be made if it is determined by the post office or the bank that maintaining the account poses financial hardship due to medical issues or the guardian’s passing. Marriage of the beneficiary after turning 18 also allows for early account closure.
