Since Sukanya Samriddhi Yojana is a government-backed scheme, returns are guaranteed and on maturity of the account, the amount is paid directly to the girl child.
Question: Kindly guide us on the Sukanya Samriddhi Yojana available for investing in the name of a girl child and the key aspects associated with the same. Also, what are the tax benefits which taxpayers can avail by way of investing in the Sukanya Yojana? Are there any other benefits associated with the said scheme?
Response given by Dr. Suresh Surana, Founder, RSM India: The Sukanya Samriddhi Yojana (herein after referred to as ‘account’ or ‘scheme’) is a savings scheme initiated by the Department of Economic Affairs, Ministry of Finance, specifically designed for the benefit of the girl child. The scheme was launched by Prime Minister Narendra Modi as part of the ‘Beti Bachao, Beti Padhao’ campaign to promote the welfare of the girl child and encourage parents to save for their education and marriage expenses.
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Some of the key considerations of investing in the Sukanya Samridhi Yojana include:
* An account under such scheme may be opened by any of the parents/guardians in the name of a girl child till she attains the age of 10 years. Further, it is pertinent to note that an account under this scheme may be opened for a maximum of two girl children in one family. However, in certain cases, a family may be eligible to open an account under this scheme for more than 2 girl children (for instance, the first order of birth resulted in triplets, and all the children are girls).
* Any girl child cannot have more than one account under this scheme in the post offices and in authorised banks.
* Guardian of the girl child would be required to make an application in Form-1 for opening an account under this scheme. Such form shall be accompanied by birth certificate of the girl child in whose name the account is to be opened, along with required documents of guardian (i.e., passport, driving license or Voter’s ID).
* The account may be opened with a minimum initial deposit of Rs. 250. However, the total amount deposited in an account shall not exceed Rs. 1,50,000 in a financial year.
* Deposits may be made in the account till the completion of a period of 15 years from the date of opening of the account. The current interest rate on such scheme is 8.2% per annum.
* The account shall be operated by the guardian till the account holder (i.e., girl child) attains the age of 18 years and thereafter the account may be operated by the girl child herself by submitting necessary documents.
* The account holder/ guardian shall be eligible to make withdrawals of upto 50% of the amount available in the account for the purpose of education of the account holder. In order to make such withdrawals, an application in Form-3 needs to be made. Further, the taxpayer should note that such withdrawal shall only be allowed after the account holder attains the age of 18 years or has passed 10th standard, whichever is earlier.
* The account shall mature on completion of a period of 21 years from the date of its opening. However, the closure of account may also be permitted before completion of 21 years if the account holder makes an application requesting the same for the purpose of intended marriage of the account holder. However, a declaration duly signed on non- judicial stamp paper attested by the notary supported with proof of age confirming that the applicant will not be less than 18 years of age on the date of marriage needs to be furnished to the government.
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Tax Benefits of Sukanya Samriddhi Yojana
Sukanya Samriddhi Scheme falls under the EEE (Exempt, Exempt, Exempt) tax category, which means an investor is not liable to pay tax at all on three levels – investment, earning and withdrawal.
Any payment received from an account (i.e., at the time of maturity or in the nature of interests) opened in accordance with Sukanya Samriddhi Account Rules shall be exempt from tax u/s 10(11A) of the Income Tax Act, 1961 (herein after referred to as ‘IT Act’).
Investments made in the SSY scheme are eligible for deductions under Section 80C, subject to a maximum cap of Rs 1.5 lakh.
Other Benefits of Sukanya Samriddhi Yojana
* The interest rate offered for SSY accounts has consistently remained high compared to other government-backed schemes
* Since Sukanya Samriddhi Yojana is a government-backed scheme, returns are guaranteed and on maturity of the account, the amount is paid directly to the girl child.
* Maintaining an account under this scheme only requires a minimum deposit of Rs. 250 per fiscal year. Therefore, it is a very affordable scheme as individuals with minimum income can also maintain this account. Morevever, penalty charges of only Rs. 50 will be applied to the missed minimum payment of Rs. 250, but the account will remain active.
