How to invest in Sukanya Samriddhi Yojana (SSY)

As part of the Beti Bachao Beti Padhao campaign, Prime Minister Narendra Modi launched the ‘Sukanya Samriddhi Yojana (SSY)’ on January 22, 2015, in Panipat, Haryana. This scheme, which translates to ‘Girl Child Prosperity Scheme,’ is aimed at addressing the issue of the declining child sex ratio in India and empowering the girl child. Let’s delve into the details of this scheme, including interest rates, tax benefits, eligibility criteria, and more.

What is Sukanya Samriddhi Yojana?

Sukanya Samriddhi Yojana is a national initiative jointly run by the Ministry of Women and Child Development, the Ministry of Health and Family Welfare, and the Ministry of Human Resource Development. Its main objectives are:

1. To stop gender discrimination against children and abolish the practice of sex determination.
2. To ensure the survival and protection of girls.
3. To ensure higher participation of girls in education and other areas.

The scheme focuses on securing a bright future for the girl child in India by facilitating parents in building a fund for her proper education and carefree marriage expenses. This is achieved through the introduction of the Sukanya Samriddhi Account.

Sukanya Samriddhi Yojana Account Details

Age Limit and Maturity Period

A girl child can only have one SSY account, which can be opened at any post office or authorized commercial bank branch between her birth and the age of 10 years. The account will mature after 21 years from the date of investment or upon her marriage after attaining 18 years of age. However, contributions have to be made for only 15 years.

Deposits under Sukanya Samriddhi Yojana

The guardian can deposit amounts in the account until the girl child attains the age of 18. After she turns 18, the account must be operated by the girl child herself. The minimum deposit amount is Rs. 250 (reduced from Rs. 1,000 previously), and subsequent deposits can be made in multiples of Rs. 50. The maximum annual deposit allowed is Rs. 1,50,000.

Interest on Deposits in Sukanya Samriddhi Yojana

The interest rate for the 1st quarter of FY 2023-2024 is 8% per annum. Interest is credited annually and compounded yearly. In the case of ‘Account under default,’ which occurs when the minimum amount of Rs. 250 per year is not deposited, it can be regularized within 15 years of account opening on payment of a penalty of Rs. 50 per default year.

Tax Benefits of Sukanya Samriddhi Yojana

Investments made in the Sukanya Samriddhi Yojana are eligible for deductions under Section 80C of the Income Tax Act, up to a maximum cap of Rs. 1.5 lakh. The interest earned and the proceeds upon maturity/withdrawal are also exempt from income tax.

Benefits of Sukanya Samriddhi Yojana

1. Affordable Payments: The minimum deposit of Rs. 250 per fiscal year makes the scheme accessible to people from all sections of society. Even if a payment is missed, the account can be continued after paying a penalty of Rs. 50 on the missed amount.
2. Educational Expenses Covered: 50% of the account balance as of the previous financial year’s end can be withdrawn to meet the girl child’s educational expenses, upon submitting proof of admission.
3. Attractive Interest Rates: The interest rate of 8% per annum is higher compared to other government-backed schemes, ensuring attractive returns on investment.
4. Guaranteed Returns: Being a government-backed scheme, there is a guarantee of returns upon maturity, offering financial security for the girl child’s future.
5. Convenient Transfer: The SSY account can be transferred from any post office to a bank or vice-versa anywhere in India, providing flexibility to the account holder.

Sukanya Samriddhi Yojana vs. PPF and LIC

Sukanya Samriddhi Yojana is specifically designed for the girl child’s development, while Public Provident Fund (PPF) is a general retirement savings scheme. Both offer tax benefits, but the SSY account has a higher interest rate and focuses on education and marriage expenses for the girl child. LIC Kanyadan is comparable to SSY in terms of benefits but requires the father’s policy ownership and offers limited access to the girl child’s funds.

Conclusion

Sukanya Samriddhi Yojana is a remarkable initiative to empower the girl child and secure her future. The scheme’s attractive interest rates, tax benefits, and flexibility make it an excellent choice for parents to invest in their daughters’ education and marriage. By supporting this scheme, we contribute to building a more inclusive and empowered society for the girl children of India.

Frequently Asked Questions (FAQs)

1. Who is eligible to open a Sukanya Samriddhi Yojana account? Only parents or legal guardians of a girl child below the age of 10 are eligible to open an SSY account. Each family can open only two SSY accounts, one for each girl child.
2. What is the minimum and maximum deposit amount for SSY? The minimum deposit amount for SSY is Rs. 250, and the maximum deposit amount allowed in a financial year is Rs. 1.5 Lakh.
3. What are the income tax benefits of investing in SSY? Investments made in SSY are eligible for a tax deduction under Section 80C of the Income Tax Act, 1961, with a maximum cap of Rs. 1.5 Lakh in a year.
4. Can I withdraw money from the SSY account before maturity? Yes, you can make partial withdrawals from the SSY account up to 50% of the balance available at the end of the previous financial year once the girl child is above 18 years of age or has passed 10th standard for higher education expenses.
5. Can a girl child operate her SSY account after she turns 18? Yes, once the girl child turns 18, she can operate her own SSY account by submitting all the necessary documents to the post office or bank where the account is held.
6. Is premature closure of the SSY account allowed? Premature closure is allowed in certain cases, such as for marriage expenses when the girl child attains the age of 18. In other extreme cases like life-threatening diseases or medical emergencies, the account can be closed with permission from competent authorities.
7. Is the SSY account transferable? Yes, the SSY account can be easily transferred from one post office to another or from one designated bank branch to another within India.
8. Is there an online option to invest in Sukanya Samriddhi Yojana? At present, investment in SSY is not possible online. The application form and investment need to be made at a nearby post office or designated bank branch.
9. What is the tax implication on the interest earned from the SSY account? SSY enjoys a completely tax-exempt status (EEE), meaning the principal amount invested, the interest earned, and the maturity amount are all tax-free.