Sukanya Samriddhi Yojana

Investments for Wealth Generation

What is Sukanya Samriddhi Yojana?

Sukanya Samriddhi Yojana (SSY) is an Indian Government initiative with the objective to provide for the welfare of girl children.

It was launched on January 22, 2015. The current interest rate is 8.5% and can be opened by parents or guardians of girls below the age of 10.The minimum investment amount required is Rs.1000.

This scheme is eligible for tax exemptions on deposits, maturity amount and the interest earned. Premature withdrawal before the girl attains 18, is not permissible. However, SSY comes with a lock-in period of 8 years.

Specially meant for parents having a daughter and want to provide for her future goals by investing regularly for a long term.

Parents with a higher risk appetite willing to expose investments to equities with the hope to yield higher returns in the long run.

  • Equity Mutual Funds 
  • Direct Stock Investing

Highlights

  • RiskThe scheme is risk-free.
  • ReturnsThe current interest rate is 8.5% (compounded annually). The rates are revised quarterly hence making it applicable for all subscribers.
  • TaxationPopularly known for its “Exempt-Exempt-Exempt (EEE)” status. The deposits, interest earned and the maturity amount is tax free.
  • Lock-in LimitationsThe SSY account matures post 21 years from the date of account opening. (Minimum lock-in period is 8 years)
  • WithdrawalsUntil the girl turns 18 years, premature withdrawals are not permissible.
  • Capital ProtectionIt is a Government scheme so the capital is adequately secure.
  • Inflation ProtectionWhen inflation is above interest, the account earns no real returns.

Investment Goal

It is an Indian Government initiative with the objective to motivate parents to save for the future of their girl child and make provision for her goals and needs.

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Overview

FeatureDescription
Eligibility

  • Indian Resident

  • Parent or legal guardian of the girl child.


Entry AgeParents or legal guardians can open this account only if the girl child is 10 years or less.
Fee Structure (Account Opening Fee & Maintenance Charges)

  • Requires a minimum deposit of Rs.1000, failing which the account shall be deactivated and can be revived after paying a penalty sum of Rs. 50.

  • The upper limit is Rs. 1.5 lakh (multiple deposits are allowed).

  • Maximum of two accounts for two different girl child.

  • A third account can be opened by the guardian if twin girls are born at second birth or 3 girls are born at the first birth.


InterestThe current interest rate is 8.5% .
TenureMinimum lock-in period is 8 years. However the account matures post 21 years from the date of account opening.
Exit OptionPremature closure is allowed only in the event of unfortunate death of the girl child.
Account Holding CategoriesGirl child below 10 years through the parents or legal guardian.
Nomination facilityNot available.

Capital & Inflation Protection

Since this scheme is backed by the Indian Government, the capital is adequately safe.

No inflation protection.

Guarantees

The interest rate currently is 8.5% and the rates are revised quarterly hence making it applicable for all subscribers.

Liquidity

  • SSY comes with a minimum lock in period of 8 years and withdrawals are not permissible until the girl turns 18.
  • Closure of the account takes place only in case of untimely death of the girl child.

Tax Implications

  • Best known for its tax status “Exempt-Exempt-Exempt”, i.e. the deposits, interest earned and the maturity amount is free form tax.
  • Under Section 80(C) of the Income Tax Act, the investment amount receives deductions up to Rs. 1.5 lakh yearly.

Account Setup Information

Where to open?

The account can be opened at:

  • Any post office in India providing savings bank service.
  • Any Central Government authorised branch of a commercial bank .

 

How to operate?

The following documents are required for the account opening process:

  • Birth Certificate of the girl child
  • Parent or guardian’s address and Identity Proof such as: PAN, Aadhar Card, declaration of Form 60 or 61, Driver’s License, Voter’s ID or Ration Card. (Carry originals of ID proof during account opening for verification purpose.)

Online Access

Restricted online access.

Key Takeaways

  • The scheme is backed by the Government of India, specifically for the welfare of girl children.
  • The account has a minimum lock-in period of 8 years.
  • The investors can enjoy tax exemptions on the deposits, interest earned and maturity amount.
  • The account also receives tax deductions under Section 80(C) up to Rs.1.5 lakh.

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