As a part of the ‘Beti Bachao, Beti Padhao’ scheme, the government launched the Sukanya Samriddhi Yojana (SSY). Enrolling a girl child under the age of 10 in this deposit scheme allows her parents or legal guardians to protect her financial future.
Under the Sukanya Samriddhi Yojana, you can open an SSY account at any bank or post office for a period of 21 years at any public or private sector bank. The investment period under SSY begins on the day the account is created and continues for 21 years.
So, let’s learn more about this Yojana, its benefits, eligibility and Sukanya Samriddhi Yojana tax benefit in the article below.
What is Sukanya Samriddhi Yojana?
To benefit the girl child of India, the Indian government has instituted a savings scheme known as the Sukanya Samriddhi Yojana. The scheme’s intended purpose is to facilitate parents’ efforts to save a sum sufficient to pay primarily for education or marriage expenses.
The Sukanya Samriddhi Yojana (SSY) is a savings program designed to benefit female children. A secure financial future for the girl child was the driving force for launching this scheme.
When you assist your child save money regularly, it may develop into a considerable amount, which can help them accomplish their aspirations. This was one of several initiatives launched in 2015 by the administration of Prime Minister Narendra Modi under the ‘Beti Bachao Beti Padhao Yojana’.
Sukanya Samriddhi Yojana Tax Benefit
Contributions to SSY accounts are eligible for the Sukanya Samriddhi Yojana tax benefit. So, let’s learn about SSY tax benefit:
- Sukanya Samriddhi Yojana tax benefit for both parents may be written off as an investment under IRS section 80C. You can deduct up to 1,50,000 rupees per year under the scheme, which is exempt from taxes.
- The interest that accrues in a savings account over time is also exempt from taxes.
- Also, you won’t have to pay taxes on the withdrawals. So, when your account matures, you may withdraw the whole amount without paying any tax on the sum.
With all these tax benefits of Sukanya Samriddhi Yojana, it is an Exempt-Exempt-Exempt (EEE) tool. Thus, the three-pronged exception.
Benefits of Sukanya Samriddhi Yojana Account
Some of the benefits of SSY include:
1. Tax Benefits
The Income Tax Act allows parents and guardians to save money by claiming contributions to the Sukanya Samriddhi Yojana as a tax deduction (Section 80C). Additional income tax benefits on Sukanya Samriddhi Yojana accrue from the non-taxable nature of the maturity amount and earned interest.
2. Girl Child Specific
The Sukanya Samriddhi Yojana exists only to guarantee financial security. The program’s primary objective is to achieve economic independence for disadvantaged girls in India.
3. Partial Withdrawal and Flexible Deposits
Girls may utilise SSY’s partial withdrawal and flexible deposit options to pay for weddings and tuition once they turn 18. With a minimum yearly commitment of Rs. 250 and a maximum of Rs.1,50,000, investors may choose from a range of deposit possibilities suitable for their financial situations.
4. Financial Security
With its high rate of return of 8%, the Sukanya Samriddhi Account helps girls achieve financial security. Annually, the interest on your assets is compounded, and the government publishes the applicable interest rate for each fiscal year. Your Sukanya Samriddhi Yojana savings will increase exponentially after you reach maturity due to the power of compounding.
5. Certain Benefits Upon Maturity
The sum, including interest, will be paid directly to the policyholder or her daughter when the Sukanya Samriddhi Yojana scheme matures. Therefore, the plan’s main goal is to help your daughter become independent once she reaches 21 years of age.
6. Long-term Investment
SSY encourages its members to save money for their daughter’s future. Hence, with a maturity period of 21 years, it is a long-term investment.
Features of Sukanya Samriddhi Yojana Account
The five main features that define SSY are:
- By providing financial assistance for things like education and marriage, the scheme hopes to put young women in a better position to plan for the future.
- With SSY, you may be certain that your investment will grow and meet the future financial needs of the girl child.
- Investors are encouraged to make the most of their money by offering higher interest rates compared to other government-backed savings schemes.
- The Income Tax Act, Section 80C, allows parents or guardians to deduct SSY investments up to a certain limit from their taxable income.
- With SSY, account holders can make partial withdrawals with their savings when they turn 18 or when they finish high school, allowing them to pay for certain things while ensuring continued savings growth.
Eligibility Criteria
The eligibility criteria include:
- The account can only be opened by the parents or legal guardians of the minor girl.
- The girl child must be under 10 years old when the account is opened. Until the girl child turns 21, the account may be active.
- With 100 rupees in recurring deposits, the first investment amount starts at ₹250 and goes up to ₹1,50,000 per year.
- A girl cannot have more than one Sukanya Samridhhi account.
- There can be no more than two Sukanya Samriddhi Yojana accounts per household.
Withdrawal on Maturity
The Sukanya Samriddhi Yojana Account has an initial investment period of 21 years. However, some conditions must be met before funds can be withdrawn.
The account’s interest and the whole corpus will be accessible to the girl once she reaches 21 years of age. This withdrawal will not be subject to tax withholding and Sukanya Samriddhi Yojana for tax benefit.
To request a withdrawal, you must fill out the form and provide all necessary documents, such as
- Identity proof
- Address Verification
You are permitted to withdraw for academic reasons once your child reaches the age of 18 or finishes the tenth grade of education.
Documents required will be:
- Paperwork for admission to a college or institution
- Copy of fee slip
No more than half of your available amount can be withdrawn.
How to open a Sukanya Samriddhi Account?
You may create a Sukanya Samriddhi account by visiting:
- Preferred Bank branch
- Post office
Opening a Sukanya Samriddhi account at a bank
Here are the steps you take to set up your Sukanya Samriddhi account by visiting a bank.
- Visit the preferred bank branch of your choice.
- A completed application form for the Sukanya Samriddhi Yojana is required. The name of this document is FORM SSA-1. You may get this at any bank branch you visit.
- After completing this form, please provide all necessary documents like – the beneficiary’s birth certificate, address proof of the guardian or parents of the beneficiary, and ID proof of the guardian or parents of the beneficiary.
- Please submit the first payment. A down payment of at least 250 rupees is necessary. One could invest 1.5 lakhs rupees at the maximum once a year.
- After you submit all the necessary papers, the bank will need a few days to process your application.
- Your SSY account cannot be opened until they verify your identity.
Opening a Sukanya Samriddhi account at a Post Office
Here are the steps you take to set up your Sukanya Samriddhi account by visiting the post office:
- Just visit the Post Office (PO) that’s nearest to you
- A form to open an account will be available at the Post Office; kindly complete it.
- Include supporting documents, such as identification and proof of residence, with your application submission.
- Deposit the amount (Rs. 250 is the minimum, and Rs.1.50 lakhs is the maximum).
- After the necessary processing and the documents are verified, you will get a passbook, and your account will be set up.
Banks that Offer SSY Account
There are a total of 28 banks that offer the SSY scheme:
- State Bank of India
- United Bank of India
- State Bank of Patiala Sukanya Samriddhi Yojana
- State Bank of Travancore Sukanya Samriddhi Yojana
- State Bank of Mysore Sukanya Samriddhi Yojana
- State Bank of Hyderabad Sukanya Samriddhi Yojana
- State Bank of Bikaner and Jaipur Sukanya Samriddhi Yojana
- UCO Bank
- Punjab National Bank
- Oriental Bank of Commerce
- Indian Bank
- ICICI Bank
- Corporation Bank
- Canara Bank
- Bank of India
- Axis Bank
- Allahabad Bank
- Vijaya Bank
- Union Bank of India
- Syndicate Bank
- Punjab & Sind Bank
- Indian Overseas Bank
- IDBI Bank
- Dena Bank
- Central Bank of India
- Bank of Maharashtra
- Bank of Baroda
- Andhra Bank
Conclusion
One of the best investment opportunities is the Sukanya Samriddhi Yojana, which you may use to build a firm foundation for your daughter’s future. Because of its EEE status and sovereign guarantee, the Sukanya Samriddhi Yojana may help both parents and their daughters. Contributing to the Sukanya Samriddhi Yojana, collecting compound interest, and taking benefits of the Sukanya Samriddhi Yojana tax benefit section on your contributions can support your daughter’s education and marriage objectives, even when inflation is a factor.
FAQ’s:-
At the account’s maturity, the money may only be accessed by the girl child whose name is on the account.
The payment duration for SSY accounts is 15 years, and the maturity period is at least 21 years.
Invest in the SSY account at the birth of the girl child but no later than 10 years of age.