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Sukanya Samriddhi Yojana Account – Saving scheme for Girl Child – Details & Review

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In Jan 2015, the government has announced a new savings scheme called “SUKANYA SAMRIDDHI ACCOUNT” (SSA) / Sukanya  Samridhi Yojna which is mainly for saving money for the girl child’s education and marriage. It provides tax benefit u/s 80C as well as Interest rate of 9.1%.  9.2%.

Interest rate for the current financial year 2015-16 is 9.20 per cent against 9.1 per cent in the previous year.

In the post below, we will try explain the features of this savings scheme and answer your queries related to benefits and drawbacks of SUKANYA SAMRIDDHI ACCOUNT, how can one open this account, when you can withdraw money from this account, how this account is compared to other investment options like PPF.

What is Sukanya Samriddhi Account?

Sukanya Samriddhi Account (SSA) is an saving deposit investment scheme which can be opened for a girl’s child. The scheme is specially designed for girl’s higher education or marriage needs and should be opened by her parents or legal guardian.

One can deposit a maximum of Rs 1,50,000 per financial year (Apr – Mar) and the yearly interest rate in this account is 9.1% 9.2% compounded on a yearly basis. (Interest declared every year). For investments made in this account, you can claim deduction under Section 80C of the Income Tax Act.

Features of Sukanya Samriddhi Account

  • Minimum deposit per year – Rs 1000 & Maximum deposit per year – Rs 150000
  • There is no limit of the number of transactions in a year.
  • The account can be opened when your girl child is born till she attains 10 years of age,
  • You can deposit the money in the account only for the 14 years from the date of opening.

Interest Rate on Sukanya Samriddhi Account

  • Interest rate applicable on this account – 9.1% 9.2% compounded on a yearly basis.

    Interest rate for the current financial year 2015-16 is 9.20 per cent against 9.1 per cent in the previous year.

  • Please note that this interest rate is not fixed and will be notified on a yearly basis or from time to time whenever applicable, like PPF.

Assume that you open the account when the girl child is born & you contribute the full amount of Rs 1.50 lakhs for 14 years, the corpus amount will be as follows (assuming 9.1% interest)

  • After 21 years – Rs 78.9 Lakhs
  • After 18 years – Rs 60.7 lakhs

Read my other post for detailed calculation of maturity value in case of annual contribution or monthly contribution.

Maturity and Premature Withdrawal

Maturity of Sukanya Samriddhi Account – 21 yrs from the date of opening the account or before the marriage of the girl, whichever is earlier.

If parents want to close the account before 21 year for marriage purpose, an affidavit will be required that the girl has reached at least 18 yr of age.

One can also partially withdraw 50% of the balance amount after the girl reaches 18 years of age, for the education purpose and rest has to be left in the account so that it can be used for the marriage purpose.

Apart from that, the account can still be closed much before in cases of extreme compassionate grounds such as medical support in life­ threatening diseases. death, etc.

How & where to open this account?

You can open SSA account either in a Post Office or any public sector bank. Documents required to open this Sukanya Samriddhi account are as follows:

  • Identity proof
  • Address proof
  • Birth certificate of girl child

You can open only maximum of 1 account per girl child and in total only 2 accounts can be opened by parents for 2 girls (one for each), but in case the second birth has resulted in twins, then 3 accounts are allowed.

You will get a passbook under this scheme which will have details of the account holder (daughter name) along with other information like date of opening etc. Also, the account can be transferred to any city in India later if you wish.

You can make the payment by Cash, Cheque or demand draft by going to the post office or the bank where you have opened the account. As of now, there is no online facility to transfer funds to SSA.

It is not clear from the released documents if NRI can invest in these schemes or not. I will update later once I get more information.

Read – List of 28 banks where you can open this account

Tax applicable on the money deposited and earned and maturity amount?

Currently the taxation status of this scheme is “Exempt-Tax-Exempt” (ETE) which means money deposited is exempt from tax, interest earned is taxable, and maturity amount is again exempt.

You can claim deduction under Section 80C upto Rs 1.50 lakhs.

UPDATE: In Budget 2015, The Interest from scheme is made TAX FREE as well.

So the current status will be “EEE”

Drawbacks

  • You also need to make sure that you do not skip your payments each year, otherwise a penalty of Rs. 50 will be levied for each year of non-contribution.
  • There is no loan facility under this scheme.
  • Tenure is at 21 years of age or after 18 at time of marriage. Partial withdrawal is allowed after 18 years.

Comparison between Sukanya Samriddhi Account & PPF Account

Features Sukanya Samriddhi Account PPF Account 
Tenure Tenure is at 21 years of age or after 18 at time of marriage. Tenure is 15 years
Partial withdrawal Partial withdrawal is allowed after 18 years Partial withdrawal is allowed after 6 years
Interest rate Current Interest rate is 9.1%Current Interest rate is 9.2% Current Interest rate is 8.7%
Taxation ETE –interest earned is taxableNow, Interest is Tax free as well. EEE – Interest earned is tax free
Extension after maturity No rules for extension PPF account can be extended
Who can open Only girls child ( 0-10 years) Any one , Any age
Online payment No Yes

Should you consider opening Sukanya Samriddhi Account for your daughter ?

Though the intention of this initiative is good – a scheme for girl child benefit, the features of these accounts are not very compelling.

For such a long term, investor should consider investing via Equities fund which may provide better returns & corpus amount. To also benefit for tax deduction, they can consider investing via ELSS Mutual Funds.

For small investor in Low or Nil tax bracket, and intend to invest in Fixed Income product, they can consider investing a portion of investment amount in Sukanya Samriddhi Account.

Also, Read other Articles related to Sukanya Samriddhi Account below:

 

Sukanya Samriddhi Yojna – List of 28 banks to open this Account

Sukanya Samriddhi Account – Features & Review

Sukanya Samriddhi Account –  Maturity value amount & calculator

Sukanya Samriddhi Account – Application Form download for Bank or Post office

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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About wealth18

The author is a Chartered Accountant and loves to write about Personal Finance, Wealth Management, Taxation etc. Disclaimer - The articles on this website is for informational and knowledge purposes and should not be treated as financial advice, Please consult your financial advisor before taking any investment decision.

18 comments

  1. Hello,

    May I know if NRI/RNOR status father open an account for his daughter residing in India?

    Best regards,

    Shyam

    • Sukanya Samriddhi Yojna is governed by Post office Small Savings Scheme rules and NRIs are not eligible to invest in such schemes. But in the official gazette, there is no clause about NRI’s eligibility.
      It’s also not clear whether one opens the account and then becomes NRI will one have to close the account or it can be continued till maturity as in PPF. But remember that one has to physically go and pay the amount.

  2. Hello Sir

    Can you comment whether NRI can invest on sukanya samriddhi account for my child who is US born but has PIO card and have plans to return to india from few years from now?

    Thanks
    Krish

    • As Sukanya Samriddhi Yojna is governed by Post office Small Savings Scheme rules and NRIs are not eligible to invest in such schemes. But in the official notification, there is no clause about NRI’s eligibility. But you need to physically submit the form and the amount.

  3. Sir

    Currently Bank of India is not providing such a facility. Please tell me which bank in U. P. is providing this facility. I want to open account in Bank rather than PO because post office payments system is worst.

  4. Despite Govt is instructing the banks to give regular updates on account opening status of this scheme, there is no update from any bank. I have visited couple of bank in last week and strange that many even did not heard about this scheme. What is going on?

  5. Great initiative by Govt however their should be an online mechanism to opt for the same. It is difficult to deal with bank especially when they are clueless and least interested.

    • Hi Sameer, I agree. As of now many banks are not aware.
      Very recently PNB was the first bank to announce the implementation of this scheme.

  6. Very nice policy

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