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What is Sukanya Samriddhi Yojana (SSY)? All you Need to Know

The Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme in India that aims to promote the financial well-being of girl children in the country. Read ahead to know more about it.

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Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

Amidst the decline in the child sex ratio and the rise in female foeticide, the Government of India launched a campaign called ‘Beti Bachao Beti Padhao’ in 2015. The purpose of this initiative was to encourage gender equality and women empowerment. To promote this initiative, investment options like Sukanya Samriddhi Yojana (SSY) were introduced.

The SSY scheme is crafted for the parents of a girl child. With this Yojana, the parents can secure the future of their girl child by systematically investing a portion of their savings. This account matures after 21 years or until the female child turns 18 and gets married.

Let us have a look at what SSY is and what are the features and benefits of Sukanya Samriddhi Yojana.

What is Sukanya Samriddhi Yojana?

Sukanya Samriddhi Yojana (SSY) is a deposit scheme started by the Government of India to save funds for the education and marriage of a girl child. This program was initiated keeping in mind the decline in the sex ratio in the country.

This Government scheme is aimed at encouraging parents to build a bright future for their girl child. Upon maturity of the SSY accounts, the parents of the girl child or the guardian can withdraw those funds to provide better education for that child and to bear the expense of her marriage.

Sukanya Samriddhi Yojana - Interest Rates

The interest rates for the Sukanya Samriddhi Yojana are reviewed and revised periodically by the government. Under the union budget 2023, the interest rate is set at 8% per annum. It is important for potential investors to stay updated with the latest interest rates before making any investment decisions.

The interest on the SSY account is compounded annually and credited to the account balance. The interest calculation is based on the minimum balance between the 10th and the last day of the month. This means that to maximize the interest earned, it is advisable to deposit the maximum amount within the specified limits before the 10th of each month.

It is important to note that the interest rate offered by the Sukanya Samriddhi Yojana is relatively high compared to other savings options available in the market. This makes it an attractive choice for parents who want to secure their daughter’s future and earn a decent return on their investment. The compounding nature of the interest further boosts the growth of savings over time.

How to Calculate Interest on Sukanya Samriddhi Yojana Scheme?

It is essential to understand the interest rate and the compounding frequency associated with the Sukanya Samriddhi Yojana scheme. To calculate the interest on the scheme, follow these steps:

Determine the Deposit Amount

The scheme allows a minimum annual deposit of ₹250 and a maximum of ₹1,50,000. Choose an amount within this range that suits your financial capabilities.

Calculate the Interest for the First Year

To calculate the interest for the first year, multiply the deposit amount by the annual interest rate. For example, if you deposited ₹50,000, the interest for the first year would be ₹50,000 * 0.076 = ₹3,800.

Calculate the Total Amount After the First Year

Add the deposit amount and the interest earned for the first year. In this case, the total amount would be ₹50,000 + ₹3,800 = ₹53,800.

Repeat the Process for Subsequent Years

Repeat the calculation process for each year until the desired period is reached or until the account matures, which is 21 years from the date of opening the account. Keep track of the yearly interest earned and the total amount accumulated.

What is Sukanya Samriddhi Yojana Calculator?

The SSY calculator operates on a straightforward principle of compounding interest. It considers the compound interest accrued on the initial investment and subsequent contributions made annually until the completion of the scheme’s tenure. By using the calculator, one can gain insights into the potential growth of their savings and make informed decisions accordingly.

Factors Considered by the Calculator:

Initial Deposit

The calculator takes into account the amount deposited at the beginning of the scheme.

Annual Contribution

The calculator factors in the yearly contributions made toward the account.

Duration

The scheme matures after completing 21 years from the date of opening the account. However, partial withdrawals can be made once the girl child reaches the age of 18.

Interest Rate

The calculator uses the prevailing interest rate, which is revised by the government on a quarterly basis. The interest is compounded annually and credited to the account.

How Does Sukanya Samriddhi Yojana Account Work?

To open a Sukanya Samriddhi Yojana account, the girl child should be below 10 years of age. Parents or legal guardians can open the account in any authorized post office or designated public or private sector bank. The account requires essential documents such as the birth certificate of the girl child, proof of identity and address of the parents/guardians, and a few passport-sized photographs.

Deposits

The account can be opened with a minimum initial deposit of ₹250, and subsequent deposits can be made in multiples of ₹100. The maximum annual deposit allowed is ₹1.5 lakh. Contributions can be made for a period of 15 years from the account opening date.

Tenure and Maturity

The account has a tenure of 21 years from the date of opening or until the girl child’s marriage, whichever is earlier. Upon maturity, the account holder receives the accumulated amount along with the accrued interest.

Interest Rate

The interest rate for Sukanya Samriddhi Yojana is revised quarterly by the Government of India. Historically, the interest rates have been attractive and higher than most other small savings schemes. The interest is compounded annually and credited to the account.

Tax Benefits

Contributions made to the Sukanya Samriddhi Yojana account are eligible for tax benefits under Section 80C of the Income Tax Act, 1961. Additionally, the interest earned and the maturity amount are tax-free, making it an attractive investment option.

Eligibility Criteria for Sukanya Samriddhi Yojana

Sukanya Samriddhi Yojana offers attractive interest rates and tax benefits, making it a popular choice among parents. However, it is essential to understand the eligibility criteria before enrolling in this scheme.

Age of the Girl Child

The scheme allows parents or legal guardians to open an account under the Sukanya Samriddhi Yojana for a girl child from her birth until she attains the age of 10 years. The account can be opened at any time within this period.

Citizenship

Sukanya Samriddhi Yojana is available only to Indian citizens. Non-Resident Indians (NRIs) cannot open an account under this system. However, if a girl child becomes an NRI after opening the account, she can continue to operate the account until its maturity.

Number of Accounts

Only one account is allowed per girl child under the Sukanya Samriddhi Yojana. In the case of multiple girl children, parents can open separate accounts for each of them, subject to meeting the age criteria.

Parental Consent

The scheme requires the consent of the parent or legal guardian to open an account on behalf of the girl child. The parent or guardian will act as the account operator until the girl child reaches the age of 18 years.

Account Closure

The account under Sukanya Samriddhi Yojana can be closed before maturity if the girl child gets married after attaining the age of 18 years. In such cases, the account can be closed by submitting the necessary documents to the bank or post office where the account is held.

Benefits of Sukanya Samriddhi Yojana

Since SSY’s inception, the scheme has gained significant popularity due to its numerous benefits and incentives. Now let us shed light on the key advantages of the Sukanya Samriddhi Yojana and its positive impact on the lives of young girls and their families.

Higher Returns and Tax Benefits

The Sukanya Samriddhi Yojana offers an attractive interest rate, often higher than other government-backed schemes, making it a lucrative investment option. The interest rate is 8%, which is subject to periodic revisions. Additionally, contributions made towards the scheme are eligible for tax deductions under Section 80C of the Income Tax Act, 1961, allowing parents or guardians to enjoy tax benefits while securing their child’s future.

Long-Term Financial Security

The SSY aims to provide long-term financial security to the girl child. The account matures after 21 years from the date of opening or when the girl gets married after the age of 18. The accumulated corpus, along with interest, can be utilized for various purposes, including higher education, marriage expenses, or entrepreneurship. This scheme ensures that families can meet the financial requirements of their daughters without any stress or financial burden.

Empowerment of the Girl Child

Sukanya Samriddhi Yojana not only promotes financial stability but also empowers the girl child. By opening an account in her name, parents send a strong message about the value of education, independence, and equal opportunities for their daughters. The scheme encourages families to invest in their daughters’ future, breaking societal stereotypes and promoting gender equality.

Flexibility in Deposits

The scheme offers flexibility in depositing funds, making it accessible to families from various income groups. This flexibility allows families to contribute according to their financial capabilities, ensuring inclusivity and participation from all sections of society.

Easy Account Opening and Operation

Opening a Sukanya Samriddhi Yojana account is a straightforward process. Parents or legal guardians can open an account in any post office or authorized commercial bank. Only a few essential documents, such as the birth certificate of the girl child and KYC documents of the parents or guardians, are required.

Risk-Free Investment

One of the notable benefits of the Sukanya Samriddhi Yojana is that it is a risk-free investment. The scheme is backed by the Government of India, ensuring the safety of the deposited funds and the interest earned. This aspect provides peace of mind to parents or guardians, knowing that their savings are secure and will grow over time.

Tax Benefits of Sukanya Samriddhi Yojana

What are the tax benefits of Sukanya Samriddhi Yojana

The Sukanya Samriddhi Yojana Tax Benefits play a crucial role in making this scheme an appealing investment option for parents. Let us explore the various tax advantages associated with SSY:

Tax-Free Withdrawals

One of the key advantages of SSY is that the maturity amount, including the principal and accumulated interest, is entirely tax-free. On maturity, the entire amount can be withdrawn without any tax implications.

No Wealth Tax

The amount invested in Sukanya Samriddhi Yojana does not attract any wealth tax. This is beneficial for individuals who may have significant assets and want to save for their daughter’s future without incurring additional taxes on their overall wealth.

Control Over the Account

The Sukanya Samriddhi Yojana account can be created and handled by the female child’s parent or legal guardian until she reaches the age of 18. This provides the parents with the authority to manage the account and make strategic investment decisions. Having control over the investment ensures that parents can optimize the savings to meet their daughter’s financial goals effectively.

Key Features of Sukanya Samriddhi Yojana (SSY)

The scheme primarily focuses on empowering the girl child and promoting her education, welfare, and financial security. Sukanya Samriddhi Yojana offers attractive interest rates and tax benefits, making it a popular choice for parents and guardians to secure their daughter’s futures.

Account Opening and Eligibility

Parents or guardians can open an SSY account in the name of a girl child below the age of 10 years. The account can be opened at any authorized post office or designated public sector banks across India.

Interest Rates

The interest rates on Sukanya Samriddhi Yojana accounts are revised quarterly by the government. Annually, interest is compounded and credited to the account. As of the latest update, the interest rate is set at 8% per annum (subject to change).

Tenure and Maturity

The tenure of the SSY account is 21 years from the date of opening or until the girl child gets married after attaining the age of 18. On maturity, the accumulated amount, along with the interest, is paid to the account holder.

Tax Benefits

SSY offers tax benefits under Section 80C of the Income Tax Act. Contributions made towards the account are eligible for deduction up to ₹1.5 lakh in a financial year. Additionally, the interest earned and the maturity amount are tax-exempt.

Partial Withdrawal and Premature Closure

Partial withdrawals of up to 50% of the accumulated balance are allowed for higher education purposes when the girl child reaches the age of 18 years. Premature closure of the account is permitted in the event of the account holder’s unfortunate demise or in case of exceptional circumstances determined by the government.

Transferability

In the case of the account holder’s relocation due to a change in the parent’s or guardian’s job, the SSY account can be transferred to any authorized bank or post office across India without any charges.

Account Operation and Documentation

The SSY account can be operated by the parent or legal guardian until the girl child attains the age of 18 years. Proper documentation, such as the birth certificate of the girl child, identity proof, and address proof of the parent/guardian, is required to open the account.

How to Pay for Sukanya Samriddhi Yojana Online?

One of the convenient aspects of the scheme is the ability to make online payments for deposits, making it easier for account holders to contribute towards their child’s future. We will guide you through the process of paying for Sukanya Samriddhi Yojana online.

Step 1: Ensure You Have an Active Sukanya Samriddhi Yojana Account

It is important to have an active Sukanya Samriddhi Yojana account for the girl child. This account can be opened at any designated bank or post office authorized to offer the scheme.

Step 2: Register for Internet Banking or Mobile Banking

To make online payments for Sukanya Samriddhi Yojana, you need to have Internet banking or mobile banking facilities activated for your bank account. If you haven’t registered for these services, visit your bank’s website or contact the bank branch to complete the registration process. Most banks provide easy online registration options for their customers.

Step 3: Log in to Your Bank’s Internet Banking Portal or Mobile Banking App

Once you have registered for Internet banking or mobile banking, visit your bank’s official website or open the mobile banking app on your smartphone. Enter your login credentials, such as username and password, to access your account.

Step 4: Locate the Bill Payment or Fund Transfer Option

After logging in, navigate to the section where you can make bill payments or transfer funds. This option might be labeled differently across different banking platforms, so look for terms like “Payments,” “Transfer,” or “Bill Pay.”

Step 5: Add Sukanya Samriddhi Yojana as a Payee

Within the bill payment or fund transfer section, search for the option to add a new payee or beneficiary. Here, you will need to provide the necessary details of your Sukanya Samriddhi Yojana account, such as the account number and the name of the bank or post office where the account is held. Ensure that you enter the correct details to avoid any payment issues.

Step 6: Verify the Added Payee

Once you have added Sukanya Samriddhi Yojana as a payee, your bank might require you to verify the details. This could be done through an OTP (One-Time Password) sent to your registered mobile number or any other authentication method specified by your bank. Follow the instructions provided by your bank to complete the verification process.

Step 7: Initiate the Payment

Once the payee has been successfully added and verified, you can proceed with initiating the payment. Enter the desired amount you wish to deposit into the Sukanya Samriddhi Yojana account. Review the payment details and ensure they are accurate before confirming the transaction.

Step 8: Acknowledgment and Confirmation

After initiating the payment, you will receive an acknowledgment or confirmation of the transaction. This confirmation may include a transaction reference number, which you should keep for future reference. It is advisable to take a screenshot or note down the details for record-keeping purposes.

What Happens if You Pay Less or Excess Amount for Sukanya Samriddhi Yojana?

SSY offers attractive interest rates and tax benefits, making it an attractive investment option for parents and guardians. However, it is crucial to understand the implications of paying less or excess amounts into the Sukanya Samriddhi Yojana account.

Let us explore what happens if you pay less or more than the prescribed amount for Sukanya Samriddhi Yojana.

Paying Less Amount

If you pay less than the required amount for a particular financial year, it may lead to the following consequences:

a. Defaulting on minimum deposit

The minimum deposit for Sukanya Samriddhi Yojana is ₹250 per financial year. Failure to make this minimum deposit may result in the account being classified as “inactive.” To reactivate the account, you will have to pay a penalty of ₹50 per year, along with the minimum deposit amount for each year of default.

b. Reduced maturity amount

The overall maturity amount of the Sukanya Samriddhi Yojana account depends on the cumulative deposits made over the years. Paying less than the prescribed amount will naturally reduce the maturity amount. This can affect the financial goals and aspirations you have set for your child’s future.

c. Missed tax benefits

One of the key advantages of the Sukanya Samriddhi Yojana is the income tax exemption on contributions made under Section 80C of the Income Tax Act. However, if you pay less than the specified amount, you may miss out on the full tax benefits available.

Paying Excess Amount

While it is advisable to make regular contributions to the Sukanya Samriddhi Yojana, paying an excessive amount may have the following implications:

a. No additional interest

The interest rate offered on the Sukanya Samriddhi Yojana is determined by the government and is subject to change from time to time. Deposits made above the prescribed amount do not earn any additional interest. Therefore, contributing more than required will not yield any extra financial benefits in terms of interest.

b. Utilization restrictions

The primary objective of the Sukanya Samriddhi Yojana is to secure the girl child’s future education and marriage expenses. While excess payments do not have any negative consequences, they may limit your ability to invest in other financial instruments or meet other financial goals.

c. No tax benefits on the excess amount

While contributions up to ₹1.5 lakhs per financial year are eligible for tax benefits under Section 80C, any amount in excess of this limit will not qualify for additional tax deductions. It is important to note the maximum allowable limit to ensure you optimize your tax planning effectively.

Rules for Premature Withdrawal from Sukanya Samriddhi Yojana

While the primary objective of SSY is to encourage long-term savings, there may be situations where premature withdrawal becomes necessary. However, it is crucial to understand the rules and regulations surrounding premature withdrawals from Sukanya Samriddhi Yojana to avoid any penalties or loss of benefits. Here are the key points to consider:

Lock-in Period

Sukanya Samriddhi Yojana has a lock-in period of 21 years from the date of opening the account. Therefore, premature withdrawals are generally not permitted before the account reaches maturity. However, there are certain exceptional circumstances in which early withdrawals may be allowed.

Education Needs

One of the permitted grounds for premature withdrawal is to meet the higher education expenses of the account holder. This withdrawal can only be made when the girl child has attained the age of 18 years or has passed the 10th standard, whichever is earlier. The withdrawal amount is limited to a maximum of 50% of the balance at the end of the preceding financial year.

Medical Expenses

In the case of life-threatening diseases or severe medical emergencies, premature withdrawal can be made. The withdrawal amount is restricted to the extent of the actual medical expenses incurred, as certified by the medical authority or hospital. Proper documentation and proof of medical need are essential in such cases.

Death of the Account Holder

In the unfortunate event of the death of the account holder, premature closure is permitted, and the entire balance, along with accrued interest, is paid to the nominee or the legal heir. The account must be closed within a month of the account holder’s death, and the nominee must provide the necessary documentation to claim the funds.

Account Transfer

In situations where the account holder needs to relocate due to the girl child’s marriage or change of address, the account can be transferred from one post office or authorized bank to another. This transfer does not count as a premature withdrawal, and the funds remain intact, allowing the account to continue until maturity.

Penalty and Interest Adjustment

In case of premature withdrawal, the interest on the withdrawn amount will be adjusted at the rate applicable to the Post Office Savings Account. Additionally, a penalty of 1.5% will be levied on the whole deposit amount for any premature closure or withdrawal.

It is essential to note that premature withdrawals from Sukanya Samriddhi Yojana should be a last resort and exercised only when genuinely necessary. The scheme aims to promote long-term savings for the girl child’s future, and any premature withdrawal may lead to a substantial loss of benefits, including interest and tax advantages. Therefore, it is advisable to consider alternative sources of funding before resorting to early withdrawals.

Can the SSY Account be Transferred?

If the girl child in whose name the account was opened moves out of the city, the account can be transferred anywhere in India. For this, a transfer request must be completed, and the passbook must be brought to the bank or post office branch. This transfer is free of charge if proof of residency change is provided by either the parent/guardian or account owner. If no such proof is provided, the applicant will be required to pay a fee of ₹100 to the post office or bank where the transfer was completed.

Conclusion

Sukanya Samriddhi Yojana is regulated by the central government and is available in every state of the country. It is a government-backed scheme and provides guaranteed returns with a high-interest rate. Sukanya Samriddhi Yojana’s tax benefits and flexible terms make it extremely useful and easy to avail. This scheme provides financial support to the parents to meet expenses like education and the marriage of their female child, thus encouraging the parents to raise their beloved daughter and give her a bright future.

Key takeaways

  • he amount invested in Sukanya Samriddhi Yojana qualifies for a tax deduction under Section 80C of the Income Tax Act, 1961.
  • The interest earned on the Sukanya Samriddhi Yojana account is fully tax-free.
  • The tenure of the SSY account is 21 years from the date of opening or until the girl child gets married after attaining the age of 18.
  • Partial withdrawals of up to 50% of the accumulated balance are allowed for higher education purposes when the girl child reaches the age of 18 years.

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