The Government of India has taken up several measures related to education and financial freedom for the girl child. Sukanya Samridhi Yojana is one such scheme by the government that enables parents to save and build a fund for their daughter’s bright future.
What is Sukanya Samridhi Yojana (SSY)?
Sukanya Samriddhi Yojana (SSY) is a savings scheme of the Indian Government and was launched by Prime Minister Shri Narendra Modi on 22nd January 2015. It is a part of the government’s ‘Beti Bachao, Beti Padhao’ campaign. This was done to encourage saving for the girl child’s future. SSY is a fixed income investment via which you will be able to make deposits regularly and earn interest on it. The account can be opened anytime in post offices and designated private and public sector banks between the birth of the girl child and the time she attains 10 years of age.
Benefits of Investing in Sukanya Samriddhi Yojana
Some of the benefits of investing in Sukanya Samriddi Scheme are as follows:
- Sukanya Samriddhi Yojana scheme can be opened for more than two girls in some special cases like:
- a) If a girl child is born after the birth of twin or triplet girls, then the parents of the child can open a third SSY account.
- b) If a girl child is born before the birth of twin or triplet girls, or the triplets are born earlier, then a third SSY account can be opened.
- SSY Scheme provides better interest rates compared to other small saving schemes of the government (currently 7.6% p.a for Q1 FY 2020-21)
- The money invested in the SSY Scheme is tax-deductible up to Rs 1,50,000 under Section 80C of the Income Tax Act. The final maturity amount is also totally tax-free.
- Flexible investment options with a minimum deposit of Rs 250 in a year.
- Guaranteed returns instrument backed by the Indian government (sovereign guarantee).
- Being a long-term investment, SSY benefits highly from the power of compound interest. It enables a girl child to use the funds for higher education or marriage after the maturity period is over.
- SSY Scheme also gives an option for a partial withdrawal of the accumulated amount for marriage expenses or if the girl needs the fund to pursue higher studies. However, the partial withdrawal amount cannot exceed 50 percent of the amount available in the account.
- In case you change your place of residence, then you can transfer your account balance to any post office/bank branch in the country or from a post office to a bank free of cost. You are required to submit your address proof only. For transfers under other situations, you will be charged a fee of Rs 100.
Key Features of Sukanya Samriddhi Yojana\
- When an SSY account holder is unable to make the minimum deposit of Rs 250 in a financial year, his/her account will be termed as a ‘Default Account’. Until the maturity period, this default account will earn the rate of interest as applicable within the scheme. You can reactivate the account by paying a penalty of Rs 50 and submitting the minimum deposit amount.
- The lock-in period of the Sukanya Samriddhi account is 21 years.
- Premature closure of SSY account will only be processed if a girl child dies or in cases when-
- a) Medical treatment of the girl child against any life-threatening disease.
- b) Death of the parent/guardian.
- Once the girl attains 18 years of age, she becomes eligible to operate the SSY account after submitting the necessary documents to the post office/bank where the account is being held.
Eligibility Criteria for SSY Scheme
- The parent/legal guardian can open an SSY account in the name of their girl child by submitting the child’s age proof documents.
- The girl child should not be more than 10 years of age, although a grace period of one year is allowed.
- The parents/legal guardian can only open a maximum of two SSY accounts, which is one for each girl child.
- Multiple SSY accounts cannot be opened for a single girl child.
Sukanya Samriddhi Yojana Return of Interest 2020
|Financial Year||Time Period||Rate of Interest (per annum)||Maximum Investment (in rupees)||Minimum Investment (in rupees)|
|2014-15||1st April 2014 to 31st March 2015||9.1%||1, 50,000||1,000|
|2015-16||1st April 2015 to 31st March 2016||9.2%||1, 50,000||1,000|
|2016-17||1st April 2016 to 30th September 2016||8.6%||1, 50,000||1,000|
|2016-17||1st October 2016 to 31st March 2017||8.5%||1, 50,000||1,000|
|2017-18||1st April 2017 to 30th June 2017||8.4%||1, 50,000||1,000|
|2017-18||1st July 2017 to 31st December 2017||8.3%||1, 50,000||1,000|
|2017-18||1st January 2018 to 31st March 2018||8.1%||1, 50,000||1,000|
|2018-19||1st April 2018 to 30th September 2018||8.1%||1, 50,000||250|
|2018-19||1st October 2018 to 31st March 2019||8.5%||1, 50,000||250|
|2019-20||1st April 2019 to 30th June 2019||8.5%||1, 50,000||250|
|2019-20||1st July 2019 to 31st March 2020||8.4%||1, 50,000||250|
|2020-21||1st April 2020 to 30th June 2020||7.6%||1, 50,000||250|
How to invest in the SSY Scheme?
You will be able to invest in the SSY Scheme via your nearby post office or designated branches of participating public and private banks. You are required to submit documents such as Passport, Aadhaar Card, etc along with the application form and initial deposit by cheque/draft.
Minimum and Maximum Amount
The minimum amount that one needs to deposit in the SSY account is Rs 250 and the maximum amount is Rs 1, 50, 000. You are required to invest at least the minimum amount each year for up to 15 years from the date you open the account. Hence, the account will continue to earn interest until maturity.
How to save tax on the SSY Scheme?
From the perspective of taxation, Sukanya Samriddhi Yojana Scheme comes with the exempt-exempt-exempt (EEE) status. This means that the principal amount invested, the interest earned, as well as the maturity amount are tax-free. Under the existing taxation rules of SSY, the tax deduction benefit on the principal amount invested is Rs 1, 50, 000 p.a under Section 80C of the Income Tax Act, 1961.
As investments made under the SSY scheme fall under EEE status, it will enable the parent/legal guardian to build a corpus for their daughter’s future.
How to check your SSY Account Balance?
You can check your SSY account balance easily via internet/mobile banking if your account is maintained by a participating bank branch. However, you need to make certain that this account is linked to your existing net banking account for easy access to account records. This option of checking the balance online held with participating banks is accompanied with the option of a passbook update by physically visiting the bank branch.
This facility of checking the balance online is not available if you have opened the SSY account at an India Post Office. You need to visit the post office branch to get your passbook updated to perform a balance check.
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Sukanya Samriddhi Yojana (SSY) Application Form
The SSY application form for a new account can be obtained by visiting a nearby post office or participating banks. You can also download the SSY new account application form from the website of Reserve Bank of India (RBI).
How to download SSY Application Form Online?
Sukanya Samriddhi Yojana application form can be downloaded from the following sources:
- The official website of Reserve Bank of India (RBI).
- India Post Website.
- Individual websites of public sector banks like SBI, PNB, etc.
- Websites of the participating private sector banks like ICICI Bank, Axis Bank, and HDFC Bank.
How to fill SSY Application Form?
While filling the SSY application form, the applicants are required to provide important details regarding the girl child in whose name the investment will be made. Details of the parent or legal guardian who will open the account or make deposits on her behalf are also required. The key fields that are featured in the SSY application are:
- Name of the girl child (primary account holder).
- Name of the parent or legal guardian opening the account (joint holder).
- Initial deposit amount.
- Cheque/DD number and date (for the initial deposit).
- Birth certificate details of the girl child like the certificate number, date of issue, etc.
- Medical certificate as a proof of birth of multiple girl children under a single birth order.
- Identification documents of the parent or the legal guardian such as Driving license, Aadhaar, etc.
- Present and permanent residential address according to the ID document of parent/legal guardian.
- Details of other KYC like PAN card, Voter ID card, etc.
You are required to make an initial investment of at least Rs 1,000 via cash, cheque, demand draft, or online payment.
Sukanya Samriddhi Yojana (SSY) Calculator
Sukanya Samriddhi Yojana is a long-term investment scheme that enables you to generate a high rate of interest. A Sukanya Samriddhi Yojana Calculator helps you to determine the returns you receive as well as the invested amount and tenure.
Some of the benefits of SSY calculators are:
- Shows the year of maturity for your SSY account.
- Displays the amount you receive upon maturity.
- Enables you to plan your investment portfolio more effectively.
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How does SSY Calculator work?
Follow the steps below to know how the SSY Calculator works:
- To perform the calculation, you need to provide the age of the girl child and the amount of money deposited.
- The minimum amount of money to be deposited is Rs 250 and the maximum is Rs 1,50,000.
- The maturity period of the scheme is 21 years.
- It is assumed that the individual is contributing the same amount every year.
- From 15th to 21st year, you don’t have to make any contribution. Interests will be calculated based on the previous deposits made during the scheme period.
- The interest generated while providing the final amount is considered by the calculator.
- After providing all the required details, the calculator would determine the value that will be sanctioned on maturity. For performing this process properly, at least 1 contribution in a year for 14 years is mandatory.
The SSY calculator uses the following formula to produce the result:
A= P (1+r/n)^ nt
A= Compound interest
P= Principal amount
r= Rate of Interest
n= The amount of times interest is compounded during a year
t= Number of years
Calculation Example of SSY Account Deposits
Let’s consider the following example:
- Annual investments: Rs 2 lakh
- Investment period: 15 years
- Total amount invested at the end of 15 years: Rs 30 lakh
- The interest rate for one year: Rs 7,600
- The interest rate at the end of 15 years: Rs 2, 28, 000
The value of the SSY investment at the end of 15 years assuming 7.6% p.a is equal to Rs 2, 28, 000. Hence, the amount is almost doubled by investing in this guaranteed return investment in the long term.
Differences between Sukanya Samriddhi Yojana (SSY) and Fixed Deposits (FD) for Children
|Criteria||Fixed deposits (FD)||Sukanya Samriddhi Yojana (SSY) Scheme
|Eligibilty||The parent or a legal guardian can open an FD account in their child’s name irrespective of the gender of the child.
|The parent or legal guardian of a girl child can open this account. The girl should be less than 10 years of age.|
|Interest rate||The interest rates of FD accounts are revised by the banks periodically depending upon the tenure and the amount invested. The interest rates vary for banks and are in the range of 5% to 8.5%.||The interest rate is fixed by the government every quarter. Currently, the interest rate is 7.6%.
|Interest payouts||You can choose between monthly, quarterly, semi-annual, and annual interest payouts or may withdraw the accumulated interest at the time of maturity.||The interest is paid along with the principal amount at the time of maturity or premature closure of the account.
|Lock-in period||The term of regular FDs may be short as 7 days and can go up to 10 years depending upon the scheme. However, the tax-saving FDs have a lock-in period of five years.||The SSY scheme matures in 21 years. However, deposits are made until 15 years.
|Tax benefits||You can claim tax benefits of up to Rs 1, 50, 000 under Section 80C of the Income Tax Act on the tax-saving FDs. The interest earned is taxable.||The SSY falls under the exempt-exempt-exempt (EEE) investment category. Hence, you do not have to pay any taxes on your investment, the interest earned, and on maturity. A maximum amount of Rs 1, 50, 000 can be claimed under Section 80C of the Income Tax Act.
|Partial Withdrawal||Partial withdrawals are not allowed.||50% of the amount can be withdrawn from the SSY account for higher education or marriage purposes when the girl attains 18 years of age.
Premature Closure of Sukanya Samriddhi Account
Premature closure of the SSY account can only be done by the girl on attaining 18 years of age for marriage or higher education expenses. But, there are some special cases under which the account can be closed and the particular amount can be withdrawn.
- If the girl child registered under the SSY scheme dies, unfortunately, the parents or the legal guardian will be able to claim the final amount on the account as well as the accrued interest on it. The respective amount will be handed over to the nominee of the account immediately. The parents or the legal guardian are required to submit the relevant documents that prove the death of the account holder, duly attested by the concerned authorities.
- The account can be prematurely closed if there is any sort of direction from the central government related to the inability of the depository to carry forward the account. Also, the closure can be processed if the contribution towards the account is leading to any type of financial stress to the depositor. Furthermore, proper permission from the competent authorities should be produced to process the closure and settlement of the account.
Transfer of SSY Account
One of the benefits of the SSY account is that it can be easily transferred from one part of India to another. Under existing rules, you will be able to transfer this tax-saving deposit account from one Indian post office to another or from one designated bank branch to another easily.
To initiate the process of transfer of your SSY account from a post office, you are required to fill out and submit the transfer request form with the postmaster of India Post Office where your account is located. Similarly, transfer request forms are available online as well as offline if you want to transfer the amount from one designated bank to another.
The Sukanya Samriddhi Yojana is a good scheme offered by the government to encourage savings for the girl children. The investment comes with a sovereign guarantee and its EEE designation makes it an appealing investment option for the requirements of your girl child. But, the lock-in period of 21 years can be a disadvantage for those who want to get hold of this fund earlier. But, this scheme is a good idea to have a mixture of equities in your portfolio for your daughter to make certain that you have ample finances for her higher-education or other purposes despite inflationary pressures.
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