Sukanya Samriddhi Yojana for your Daughter

Launched on January 22, 2015, Sukanya Samriddhi Yojana or SSY is a tax-free small saving scheme for a girl child. The parents or the legal guardians of the girl (up to ten years) can open up their SSY account in designated branches of the public-sector banks or the post offices in the name of the child. The minimum amount for the opening of an account is Rs 250. It is a special initiative started by the Government for girl children that aims to promote saving for her welfare.

Depositors or guardians are eligible to open only a single account for the girl child with an exemption of opening up of two accounts in the name of two different and three children in case of the birth of the twin girls in their second birth, or a triplet in the first birth.

Inflation Protection and Capital Protection

Since the scheme grants a relatively fixed rate of interest, the capital investment is suitably protected. Also, the returns are linked to the government bond returns, and hence, there is no assured inflation protection in the future.

Guarantee

The interest rate for the Sukanya Samriddhi Yojana is 75 basis points covering the total ten-year government security yield. For the period of October-December 2020, the deposit will bring an interest rate of 7.6 percent. Also, the rates are revised every quarter, and hence, the new rates will apply to all the subscribers.

Minimum Investment

The Sukanya Samriddhi Yojana account requires a minimum deposit of Rs 250 to open. Failure to make the minimum payment in the given cycle can lead to the deactivation of the account. It can only be revived then after the payment of penalty of Rs 50 along with the absent payments. Deposits can be made multiple times of the year, with the upper limit of Rs 1,50,000.

Liquidity

SSY or the Sukanya Samriddhi Yojana account has a total tenure of 21 years. However, the pre-mature closure and partial withdrawal are allowed as well in the case of higher education, marriage, or on humane grounds.

Tax Implications

Sukanya Samriddhi Yojana scheme comes with an exempt-exempt-exempt or from the EEE category. In this, the deposits, the interest earned as well as the maturity amount are tax-free for the payer. The sum invested in the Sukanya Samriddhi Yojana scheme is eligible for the tax abatement under Section 80C that is subject to the maximum of Rs 1.5 lakh per year. On the maturity of the account, the entire amount, including the interest, is tax-free.

Where to Open the Account

The account can be initiated at any post office in India doing savings bank work or at any branch of a commercial bank authorized by the central government that is to open an account under Sukanya Samriddhi Account Rules, 2014.

How to Open the Account

The parents or guardians can approach the post offices or the banks with the birth certificate of the girl child, along with the ID and address proof of the parent/guardian to open the account.

Points to Remember

• Sukanya Samriddhi Yojana is a savings instrument created for the benefit of the girl child only.
• SSY can only be opened by the parents/guardians of the girls below the age of 10 and matures 21 years after the date of opening of the account.
• The principal amount is eligible for a tax deduction and the interest earned on it is tax-free.
• A minimum cash deposit of Rs 250 is required to open an SSY account.
• Failure to make the minimum annual deposit of Rs 250 or minimum charges can lead to deactivation of the account. A deactivated account can then be revived only after paying a penalty of Rs 50, along with the missing payments.

Features at a Glance:

Eligibility: Resident Indian and a parent/legal guardian of the girl child.

Entry age: Parents/ Guardians of a girl child who is ten years or less to open an SSY account.

Minimum Investment: Rs 250/ annum

Interest: 7.6 percent for the period October-December 2020. Interest rates are subject to revisions every quarter.

Tenure

• The account will mature at 21 years after the date of opening of the account
• Partial withdrawal and pre-mature closure are allowed in certain cases.

Account-holding categories: Girl child under the age of ten years through the parents or legal guardian