June 21, 2024
Sukanya Samriddhi Yojana – Sovereign Term Deposit Scheme for Girl Child

Sukanya Samriddhi Yojana – Sovereign Term Deposit Scheme for Girl Child

Sukanya Samriddhi Yojana Updates

Aiming to promote “Beti Bachao, Bet Padhao” campaign, The Government of India had started Sukanya Samriddhi Yojana as one of the most successful small savings scheme dedicated purely towards social security and betterment of girl child. The scheme is curated in such a manner that each and every class of person gets attracted towards it and start saving for their girl child. The minimum investment amount and the restriction of withdrawal are some of the highlights of the scheme which make sure that the accumulated amount shall not be used for any purpose other than the defined purpose. Let’s dive into the details of Sukanya Samriddhi Yojana.

Why there is a need for Sukanya Samriddhi Yojana?

Rural India is still a gender-biased region of our country and girl child are still treated as a burden over-there. Sukanya Samriddhi Yojana was launched on 22nd January 2015 with an aim to provide the shelter to the girl child by making sure that they get proper education and gets married at the appropriate age through the accumulated funds.

Features of Sukanya Samriddhi Yojana

Since Sukanya Samriddhi Yojana is a small savings scheme you don’t need to put a large sum of money at once. As an old saying every droplet counts, small savings scheme is for the people who want to invest and accumulate funds for girl child slowly and steadily over the longer time. Let’s discuss the features of Sukanya Samriddhi Yojana in details:

Who can open Account under Sukanya Samriddhi Yojana?

Account under SSY can be opened by the parents and the account should be in the name of the girl child. A legal guardian can also open the account on behalf of the girl child but only when both the parents died, if a single parent of girl child is alive, a legal guardian cannot open an account under SSY. No other person except the parents and legal guardian can open an account under SSY.

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Where to Open Sukanya Samriddhi Account?

Account under SSY can be opened in the post-offices and authorized banks. Reserve Bank of India vides notification RBI/2014-15/494 Dated 11th March 2015 has notified the List of the Banks Authorized to open Account under Sukanya Samriddhi Yojana.  You can open an account in any branch of the authorized bank.

Age Limit of the Girl Child

There are no minimum age criteria for opening account under SSY. You can open an account just after the birth of the girl child. However, the maximum age limit for opening the account is 10 years i.e. till completion of 10th years.

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Number of Account per Girl Child

Maximum of two accounts can be opened by each parent or guardian i.e. one account per girl child is allowed for a maximum of two girl child. If you are blessed with two girl child then one account for each of them can be opened. In case your second girl child is twins, you can open three accounts i.e. one account for each of them.

Minimum and Maximum Deposits

The minimum amount to be deposited per year in SSY is just ₹ 250. Earlier it was ₹ 1,000. The depositor shall deposit the minimum amount each year without any fail to make the SSY account active. In case of default, a penalty of ₹ 50 shall be deposited for the years in default along with the minimum contribution of ₹ 250.

If the penalty is not paid and the account remains irregular till maturity, the entire deposits including those made before the date of default will earn an interest rate of savings account which is currently 4 percent per annum. Any excess interest credited shall be reversed.

The maximum contribution for a financial year is ₹ 1.50 lakhs per account. However, you can deposit the amount in n number of times subject to the maximum limit.

Girl Child can also make a contribution. The deposit can be made either through cash, cheque, demand draft and online transfer.

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Interest Rates

In line with other small savings schemes, the Government fixes the interest rate on a quarterly basis based on the G-Sec yields. The current rate of interest is 8.50 percent which is credited at the end of the year. That means compounding annually.

The interest shall be compounded yearly on the lowest balance of each month from the close of the 10th day and the end of the month.

In simple words, deposits made on or before 10th of the month shall fetch interest. So please keep in mind to make a deposit on or before 10th to earn interest in that month.

However, it is certain that the interest rates under Sukanya Samriddhi Yojana will always remain higher than all other small savings schemes such as PPF, EPF, NSC, KVP, etc.

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Deposit Tenure

The total tenure of the SSY account is 21 years from the date of opening of the account (no relation with the age of girl child). However, the deposit tenure in SSY is 15 years.

You will have to make a contribution for 15 years and then no contribution for 6 years. However, the account will keep accumulating interest until the maturity.

Non-Resident Indians (NRI)

Sukanya Samriddhi Yojana is only for Indian Citizens. At the time of opening of account the girl child and her parent should be Indian Citizen. In case the girl child adopts citizenship of another country after the opening of an account, the same should be intimated to the concerned post-office or bank branch within one month. The account shall be closed and the balance shall be paid.

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Account Transferability

The SSY account is transferable anywhere in India to any bank or post-office in India. You can also transfer your account from bank to post-office or vice-versa.

The transfer is free of cost on producing the proof of shifting of residence. If not such proof is furnished a fee of ₹ 100 is charged.

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Other Points

No commission agents, brokers or intermediary like in LIC is allowed under Sukanya Samriddhi Yojana. Also, conversion of existing savings account of the girl child is not allowed to be converted in Sukanya Samriddhi Account. A new account is required to be opened.

In case the original passbook is lost, misplaced, mutilation, etc. duplicate pass-book can be obtained by the account holder or parent/legal guardian from the bank or post-office where the account is maintained on payment of ₹ 50.

Calculation of Maturity Proceeds

Since yearly contribution amount is not fixed and interest rates are revised on a quarterly basis, the exact calculation of the maturity amount cannot be made. However, taking a few assumptions like a fixed contribution of ₹ 1 lac per year and the interest rate of 8.50 percent, the maturity amount can be calculated.

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Sample Calculation

Lest, you make a contribution of ₹ 1 lac per annum for the deposition tenure of 15 years, therefore your total contribution for 15 years would be ₹ 15 lacs. The rate of returns is assumed to be fixed at 8.50 percent per annum. At the end of 15 years, the accumulated amount i.e. investment amount and interest will be ₹ 30.63 lacs.

Since the contribution is for 15 years and then 6 years is the isolation period i.e. only interest will be credited but no fresh deposits, the total maturity proceed will be ₹ 49.97 lacs.

Please keep in mind that after the maturity i.e. after 21 years, the government stops paying interest on the accumulated balances.

Documents Required to Open Sukanya Samriddhi Account

To open an account under Sukanya Samriddhi Yojana in post-office or in any authorized bank, you have to simply fill an application form along with the required documents and a minimum contribution of ₹ 250 for activation of an account.

The required documents are:

  1. Sukanya Samriddhi Account opening form
  2. Birth Certificate of Girl Child.

In absence of the Birth Certificate or any other discrepancies in the Birth Certificate of the Girl Child, the following documents can be produced:

  1. Certificate of Date of Birth from the School Headmaster; or,
  2. Certificate of Date of Birth from the Hospital where the Girl Child was born.

But keep in mind that the certificate should have the name of the Girl Child as this is the only document which will make Girl Child eligible to withdraw money at the time of maturity.

  1. Identity and Address proof of Parents/Guardian such as Aadhar Card, Driving License, Passport, Ration Card, etc.
  2. Medical Certificate in case of twins or triplets to verify the order of birth.
  3. Certificate in case of an adopted child to confirm the relationship between child and parent.

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Taxation Benefits of the Deposit, Interest and Maturity Proceeds

Sukanya Samriddhi Yojana is an EEE scheme which means the yearly deposits are eligible for deduction under section 80C, accrued interest on the deposited amount is exempted under section 10 and the maturity proceeds are also exempted from tax under section 10 of the Income Tax Act 1961. Further, both parents can deposit the amount in the SSY account but the cumulative deposits should not exceed ₹ 1.50 lacs per annum.

The deduction under section 80C is for all the schemes such as PPF, EPF, VPF, Tax-Savings Fixed Deposit, Sukanya Samriddhi Yojana, NSC, etc.

Please note the account is opened by Parents or legal guardian but anybody can deposit amount in the account i.e. grandparents, uncle, etc. but the tax-benefits shall be available only for the account opener irrespective of the depositor.

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Partial Withdrawal, Premature Withdrawal, and Complete Withdrawal

Partial Withdrawal

Partial withdrawal can be made for the higher education of the girl child. Maximum of 50% of the balances of the last financial year is available for withdrawal. For example, if the application for withdrawal is given in May 2019, balance on 31st March 2019 is to be considered for calculation of 50%.

For this purpose, the child girl must attain the age of 18 years or has passed the tenth standard, whichever is earlier (earlier partial withdrawal for higher education was allowed only at the completion of 18 years of age). The application shall be given one-month prior requirement along with the documentary proof of admission in Educational Institute and fee details (slip) from such institute.

In case the higher education fee is less than 50% of the account balance than the withdrawal amount is limited to the fee amount. The withdrawal can be made as one lump-sum or in installment basis which cannot exceed one per year subject to a maximum for 5 years.

Premature Withdrawal

The premature withdrawal is allowed only in the case where the girl attains the age of 18 years and gets married before the maturity of the account. For example, the account is opened when the girl age was 8 years old. The deposits were made for 15 years i.e. till the age of 23 years and the maturity is due in 6 years i.e. by the age of 29 years but the girl gets married at the age of 25 years. In this case, the girl can apply for the closure of the account by giving the application along with the closure form, pass-book, and identity proof and address proof of the girl child. The pre-closure application cannot be made before one month of the date of the marriage or after three months from marriage.

Other Reasons for Premature Withdrawals

  • On the Death of the depositor, the account will be closed and the accumulated amount will be refunded to the family of the girl child or the account may not be closed and the balance may not be refunded and kept in the account till the maturity without the need of fresh contribution. Further, the balance kept in the account may keep earning interest.
  • On the Death of girl child, the account will be closed and the balance i.e. the amount deposited including accrued interest will be refundable to the guardian.
  • Continuity of the account is not possible due to a deteriorated medical condition but only after completion of 5 years from the opening of an account. If the withdrawal is made before completion of 5 years, then the account shall be treated as a normal savings account and interest at normal post-office or bank savings account rate will be given.
  • Change in the citizenship status of the girl child.
  • Marriage of the girl before maturity.

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Withdrawal on Maturity

After the maturity i.e. after 21 years the maturity proceeds are to be withdrawn by simply giving the application along with the closure form, pass-book, and identity proof and address proof of the girl child. The identity proof should match with the birth certificate. The maturity proceeds will be transferred to the savings bank account of the girl child.

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Benefits aka Words of Wisdom

There are several benefits of SSY account namely:

  1. High-interest rates in comparison to all other Small Savings Schemes.
  2. Risk-Free Investment as it is backed by Government.
  3. No loan against SSA and No Premature withdrawal (apart from above instances) makes sure that the investment will be used for the specified purpose.
  4. Cannot be attached under any order or decree of a court in respect of any debt or liability incurred by the parents or legal guardian.
  5. Fully Tax-Free Scheme.

At present, Sukanya Samriddhi Yojana is the best sovereign term deposit scheme for the girl child. Thus, it is highly advisable to open an account under Sukanya Samriddhi Yojana if you have a girl child.

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