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There’s no doubting that a nation’s future is in its children’s hands, with both boys and girls expected to play an equally significant role in its development. India has enormous future growth potential, which can only be realized through inclusive measures. But, unfortunately, women in India have been denied basic rights, making it difficult for them to realize their potential completely.
As a result, the Sukanya Samriddhi Scheme was created to help women overcome the financial barriers that previously hindered them from attaining their full potential. As part of the ‘Beti Bachao Beti Padhao’ campaign, Prime Minister Narendra Modi launched this small savings initiative to pay for girl child’s education and marriage needs, giving them enough possibilities to fulfil their ambitions. Thanks to a slew of perks for both the female child and her parents/legal guardians, this scheme ensures that deposits aren’t too hard on a family’s pocket, allowing them to continue their normal way of life without additional expenses.
Read on to find out more about what this scheme offers and how parents and girl children can benefit from it.
The Government of India launched the Sukanya Samriddhi Yojana to raise funds for a girl child’s education and marriage. The reduction in the country’s sex ratio prompted the creation of this initiative. It aims at providing a bright future for India’s girl children by assisting their parents in establishing a fund for their child’s proper education and worry-free marriage expenses. The parents or guardians of a girl child can use SSY to collect funds to help with their daughter’s education and marriage expenses.
Apart from securing girl children’s future, the Sukanya Samriddhi Yojana also proves to be an excellent tax-saving investment opportunity, which offers great interest rates. It empowers investors to save on taxes and create a long-term financial cushion for their girl child. Any parent of a girl child can avail the benefits by opening an SSY account in the name of their daughter before she turns ten years old.
A minimum of INR 250 (earlier set at INR 1000) and a maximum of INR 1,50,000 per year can be deposited in the SSY account.
After completion of 18 years of age, only the girl shall operate the account.
The girl child should be below the age of 10 years to be eligible for opening an SSY account.
A maximum of two accounts can be opened for two girl children. A third account may be allowed in the case of twins during the first or second birth.
If no funds have been deposited, the account can be regularized with a penalty of INR 50 per year.
Deposits have to be made for 15 years only, and the account matures after 21 years from the date of opening the account.
Premature withdrawal is allowed after five years of maintaining the account if the parent or guardian passes away or due to other reasons like marriage.
Premature closure is allowed in case of the girl’s marriage after attaining the legal age of 18 years. Other reasons like a medical emergency or financial burden on the girl child also allow premature closure of the SSY account.
There are several Sukanya Samriddhi Yojana tax benefits that one can avail by investing in such a financial tool.
1. A maximum of INR 1,50,000 per year can be claimed under Section 80C of the Income Tax Act, 1961.
2. The interest earned on the deposited amount is also tax-exempted under Section 80C.
3. The maturity amount received by the girl child is also tax-free.
The parent or guardian of the girl child is eligible for opening an SSY account only if the girl is below the age of 10 years. In case the girl child is above the age of 10, the parents cannot open an account and claim SSY tax benefits. The Sukanya Samriddhi Scheme allows one depositor to make a financial contribution on behalf of a girl child. This depositor could be a parent or legal guardian of the child. While payments to this plan are tax-deductible, Section 80C of the Income Tax Act only allows one depositor to claim tax exemptions. This means that only one of the parents or legal guardians can claim exemptions.
The interest rate for the first quarter (from April 1 to June 30, 2021) and the second quarter (from July 1 to September 30, 2021) is 7.6% each. A noteworthy fact is that if a default occurs in an account formed under this scheme, such as failure to make the required deposit, INR 250, the rate of interest will be that of a post-saving bank account. However, this is not applicable as long as the default is not caused by the individual’s death who started the account under the scheme.
Sukanya Samriddhi Scheme is a mutually beneficial scheme for both the girl child and her parents/legal guardians, with affordable payments, tax benefits, and excellent interest rates, paving the path for a brighter future for the child.
- A Consumer Education Initiative series by Kotak Life
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