Sukanya Samriddhi Yojana (SSY) is a government-backed small deposit savings scheme that was introduced in 2015 by Prime Minister Narendra Modi. This scheme forms a part of the Beti Bachao Beti Padhao campaign, aiming to aid parents or guardians in funding their girl child’s expenses. The primary goal of SSY is to ensure the educational aspirations of girls and reduce the financial burden associated with their marriage.
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SSY accounts, also known as Sukanya Samriddhi Yojana accounts, offer an impressive 8.2% per annum compounded interest rate for this quarter, i.e. from July 1, 2024, to September 30, 2024. The interest rate on Sukanya Samriddhi Yojana is revised every quarter. This interest rate stands out as one of the most competitive rates available among small savings schemes.
If you have a 5-year-old daughter, investing Rs 1.2 lakh annually, which equates to Rs 10,000 per month, at an interest rate of 8.2% per year, the estimated maturity amount in Sukanya Samridhi Yojana after 21 years would be approximately Rs 55.61 lakhs, with invested amount being Rs 17.93 lakhs and interest earned after 21 years being Rs 37.68 lakhs.
If you can invest Rs 150,000, the maturity amount will be Rs 69.8 lakh, interest earned will be Rs 47.3 lakhs with an investment of Rs 22.5 lakhs.
The formula to calculate the outstanding amount is:
A = P (1 + r/n) ^ nt
Where: A is Compound interest, P is Principal amount, r is Rate of interest, n is Number of times interest compounds in a year, and t is Number of years.
Sukanya Samriddhi Yojana investment
Sukanya Samriddhi Yojana enjoys ‘Triple E’ (Exempt-Exempt-Exempt) tax benefit is available on investments made in this. Investments made in the SSY scheme are eligible for deductions under Section 80C, subject to a maximum cap of Rs 1.5 lakh. The interest that accrues against this account which gets compounded annually is also exempt from tax under Section 10 of the Income Tax Act. The proceeds received upon maturity/withdrawal are also exempt from income tax.
The SSY allows individuals to make regular deposits and earn interest on their savings. Additionally, contributors can avail tax deductions of up to Rs 1.5 lakh in a financial year under Section 80C of the Income Tax Act for their contributions towards the scheme.
One of the key features of the Sukanya Samriddhi Yojana is its lock-in period, which spans 21 years. For instance, if an account is opened for a girl at the age of 5, it will mature when she turns 26. This long-term investment option not only promotes financial discipline but also aims to secure the future of young girls by providing them with a substantial corpus at maturity.
Premature withdrawals
The Sukanya Samriddhi Yojana account offers the benefit of no tax liability on partial withdrawals. Rest assured that your funds are secure in this account as it is backed by the Government of India. It’s important to note that while the scheme does not allow for loans to be taken against the deposits made in SSY accounts.
