Sukanya Samriddhi Yojana is a scheme initiated by the Government of India, which literally means Girl Child Prosperity Scheme. The prime aim of the scheme is to encourage parents of a girl child in order to create a fund for the future education and marriage expenses for their child.
Under the scheme a small deposit scheme for the girl child. This national-level scheme was launched as a part of the ‘Beti Bachao Beti Padhao‘ campaign and provides income-tax benefit.
A Sukanya Samriddhi Account can be opened any time after the birth of a girl till she turns 10. A minimum deposit of Rs 1,000 and maximum of Rs 1.5 lakh can be deposited in the scheme throughout the financial year. An interested candidate can open the account in any post office or authorised bank.
The account will remain active for 21 years from the date of it is opened or till the marriage of the girl after she is 18 years old.
To meet the requirement of her higher education expenses, partial withdrawal of 50 per cent is allowed after she is 18 years old.
Conditions to open a Sukanya Samriddhi Account
- The account can be opened by the parents or legal guardian in the name of the girl from till she turns 10.
- A depositor can have only one account in the name of the girl child.
- The birth certificate of the girl child in whose name the account is opened and has to be submitted by the parents or guardian while opening the account, along with other documents relating, including the identity and residence proof of the depositor.
How much can be deposited in the account?
- The initial minimum amount required to open the account is Rs 1,000, after which any amount in multiples of Rs 100 can be deposited. One must note that subject to the condition that a minimum of Rs 1,000 will be deposited in a financial year, but the total money deposited in an account on a single occasion or on multiple occasions will not exceed Rs 1,50,000 in a financial year.
- You can deposits in the account till 15 years are completed from the date of the opening of the account. Between ages 24 and 30 (when the account matures), the account keeps earning interest on the balance.
- In case of an irregular account, where the minimum amount has not been deposited is subjected to be regularised by paying a penalty of Rs 50 every year and a minimum specified subscription for the year(s) of default. If the penalty is not paid, the entire deposit, including those made before the date of default, will receive interest at post office savings bank account rate it will be reversed.
How is the deposit made?
- The deposit can be made in cash, cheque or demand draft. All it needs is a signature of the depositor, showing the name and account number, in which the deposit is to be credited) of the account holder.
- Deposits may also be made online if the respective bank or post office has the CBS (core banking solutions) availability.
- In case the deposit is made by cheque or demand draft, the date of encashment is taken as the date of credit to the account and for online transfers, it is the date of deposit.
How is the interest rate on deposits calculated?
- The government has fixed interest rates for every quarter based on the G-sec yields. The interest rate that the scheme enjoys over the G-sec rate of comparable maturity is 75 basis points.
- The interest rate since its launch is as follows:
- The interest rate, as per the government notification, compounded yearly will be credited to the account.
- In yet another scenario, if the account holder opts for monthly interest, it will be calculated on the account balance on completed thousands, in the balance which will be paid to the account holder and the remaining amount in fraction of thousand will continue to earn interest at the applicable rate. For monthly interest, only the amount in thousands will be taken into consideration, the balance will continue earning at the prevailing interest rate.
How does the account work?
- An SSY account is opened and used by the natural or legal guardian of the girl child until she turns 10.
- After the child is 10, she can operate the account herself, however, deposit in the account may be made by the guardian or any other concerned authority.
Conditions under which the account be closed prematurely
- In case of the death of the account holder, the account will immediately be closed as soon as the death certificate is issued by the competent authority, and the balance in the account will be paid with the interest till the month preceding the month of the closing of the account, to the guardian of the account holder.
- In case, a request for the premature closure can be put forward after the completion of five years after the account is opened. This too is acceptable, as per the rules, on extreme compassionate conditions like medical support in life-threatening diseases. But if the account has to be closed for another reason, it can be done but the full deposit will only get interest as per a Post Office Savings Bank account.
Is the account transferable?
- Yes, the account can be transferred from any part of the country if the girl child in whose name the account has been opened reallocates to some other place.
- The transfer is free of cost on providing the proof of shifting of residence of the parent/guardian or account holder herself. If the proof is not submitted, the applicant will have to pay Rs 100 to the post office or bank to which the transfer is made.
What are the rules for partial withdrawal?
- In case of any sudden financial requirements related to higher education and marriage, withdrawal of up to 50 per cent of the balance from the account at the end of preceding financial year is allowed. However, withdrawal of the amount is allowed only after the account holder is 18 years old.
- In order to get this, a written application along with documentary proof in the form of a confirmed admission in an educational institution or a fee slip from the institution stating the financial requirement needs to be submitted. Moreover, the withdrawal amount will be limited to the actual fee and other charges required at the time of admission.
When will the account mature?
The account matures after 21 years as noted from the date of opening or whenever the girl child gets married, whichever happens first, subject to the following:
*In case where the marriage of the account holder takes place before the completion of the time period of 21 years, the operation of the account will not be permitted after the marriage date.
*Also, if the account is closed before the completion of 21 years, the account holder will have to produce an affidavit showing that the girl child is not less than 18 years as on the date of closing of the account. On maturity, the balance, including the interest outstanding in the account, will be payable to the account holder after the withdrawal slip and passbook are submitted.
Can an NRI girl child open an SSY account?
- A girl child is eligible for an SSY account only if she is a resident Indian citizen at the time of opening the account and remains so until the maturity or the closure of the account.
- Moreover, if the parent/guardian child’s residential status changes to non-resident during the term of the scheme, zero interest will be paid from the date of citizenship or residential status changes and the account will be considered closed.
What are the tax benefits available in the scheme?
As of 2018, SSY offers the highest tax-free return with an assurance that comes with the exempt-exempt-exempt (EEE) status. The annual deposit (contributions) qualifies for Section 80C benefit and the maturity benefits are non-taxable.