This savings scheme backed by government aims at catering to the financial goals of a girl child. Let us find out more about it.
Updated on: 02-Sep-2022
What is Sukanya Samriddhi Yojana?
The Sukanya Samriddhi Yojana (SSY) is a tax-free small savings scheme for the girl child. It was launched on January 22, 2015. The parents or legal guardians of girls aged 10 or below can open an SSY account in the name of the girl child in designated branches of public-sector banks or in a post office, with a minimum amount of Rs 250.
Features of Sukanya Samriddhi Yojana
Sukanya Samriddhi Yojana age limit: Entry age
The parents or legal guardians of a girl child aged 10 or below can open an SSY account.
Investment objective and risks
The Sukanya Samriddhi Yojana is a special initiative for the girl child and aimed at encouraging saving for the welfare of the girl child. There is no inflation protection in the scheme, though the capital is protected.
Suitability and alternatives
Capital protection and inflation protection
The capital in a Sukanya Samriddhi Yojana account is completely protected, as the scheme is backed by the Government of India, making it fully risk-free with guaranteed returns. Since the returns are linked to the government bond yield, there is no assured inflation protection.
The contributions under the SSY cannot be withdrawn before the girl turns 18 or passes the 10th standard. Premature closure is allowed after five years only on fulfilment of stipulated conditions. As of now, there is no loan facility available.
The interest rate for the SSY is 75 basis points over the ten-year government bond yield. For Q2 FY22-23, the deposit will fetch an interest rate of 7.60 per cent. The rates will be revised every quarter and the new rates will be applicable to all the subscribers.
Sukanya Samriddhi Yojana tax benefit: Tax implications
The scheme has the exempt-exempt-exempt (EEE) model, where the deposits, the interest earned as well as the maturity amount are tax-free. The sum invested in the SSY scheme is eligible for tax deduction under Section 80C subject to a maximum of Rs 1.5 lakh. On maturity, the entire amount, including the interest, is tax-free.
Where to open the account
The account can be opened at any post office in India where banking service is provided or at any branch of a commercial bank authorised by the central government to open an account under Sukanya Samriddhi Account Rules, 2019.
How to open the account
The parent/guardian can approach any post office or bank with the birth certificate of the girl child, along with the ID and address proof of the parent/guardian.
The depositor can open only one account in the name of one girl child and a maximum of two accounts for two girls. However, the third account can be opened in the case of the birth of twin girls in the second birth, or if the first birth itself results in three girl children.
To view the current rates on the schemes, go to vro.in/s34211