Sukanya Samriddhi Yojana is an initiative launched by Prime Minister Narendra Modi, the Central Government, as a part of the “Beti Bachao Beti Padhao” campaign. The sole objective of this tax-saving scheme is girl child prosperity.
Sukanya Samriddhi Yojana is a Central Government savings scheme with an intention to secure a girl child’s future. The girl child must be 10 years of age or younger to open an account under this scheme. This scheme carries a higher rate of interest, tax deduction, apply online benefits.
The following are the eligibility criteria:
The interest rate is fixed by the government and reviewed quarterly while compounded annually. The interest rate for the financial year 2019-2020 is 8.50%.
The principal amount payable is available as a tax exemption under section 80C. The interest earned during the entire period of investment and the maturity amount is tax-free.
You can open the account at a post office, or apply online at a designated branch of a nationalized banks or a private bank.
The application form along with the following documents
|Amount of investment||The minimum amount of investments must be Rs 500|
The maximum amount of investment can be up to rs 1.5 lakhs
|Maturity of investment||The account matures once the girl child is 21 years of age or on occasion of marriage after attaining 18 years of age|
|Investment Period||The investment can be made up to 15 years, after 15 years the account continues to earn interest until the maturity of the account|
|Account under default||An account is held ‘Account under default’ if the minimum amount of investment is not made in a financial year.|
You can withdraw the investment amount in the scheme after the completion of 15 years of investment or premature or partial withdrawal.
On maturity of the investment, the principal amount and interest can be withdrawn.The withdrawal is allowed on submission of the following documents:
A premature or partial withdrawal of investment is allowed on the occasion of the marriage once the girl child attains the age 18 years. The application must be filed 1 month before the marriage along with age proof of the girl child.
The Sukanya Samriddhi Yojana (SSY) scheme is an initiative by the government to secure the future of a girl child. Children’s mutual funds are funds that serve the same purpose of securing a child’s future. This mutual fund carries a higher interest rate than other mutual funds.
The children’s mutual fund can be made by the legal guardian or parents of the minor child to secure the future of the child.
The funds are invested in both equity-oriented mutual funds and debt-oriented mutual funds. The ratio of the investment depends on the scheme chosen by the parents.
If the funds are invested more than 60% in equity securities, it is termed as equity-oriented mutual funds. If the funds are invested more than 60% in debt instruments, it is termed as debt-oriented mutual funds.
|Particulars||Sukanya Samriddhi Account||Children’s Mutual Fund|
|Who can opt for the scheme?||Only a girl child||Can be opted for both girl child and boy child|
|Age Limit||The girl child must be of 10 years of age or younger||The child can be 18 years of age or younger|
|Limit on accounts||A maximum of 2 accounts per family||No such limit|
|Return on investment||Interest rate is fixed by the government and reviewed quarterly||Interest income depends on the performance of the funds in the market|
|Tax Benefit||The principal amount, interest earned and maturity proceeds all are tax-free||No tax implication until the redemption of the fund. On redemption benefit of indexation is available.|
|Risk||No risk since the scheme is operated by the government||Depends on the market fluctuations and the risk an investor is ready to take as per his earnings and cost of living|
Both schemes have their own features and benefits along with limitations. While SSY under the Beti Bachao Beti Padhao scheme is risk-free and offers tax benefits, an equity mutual fund offers higher returns. Not to mention, both schemes will offer a good option for investment in the long term. An investor can divide their funds and invest in both the schemes to avail the maximum benefit and manage the limitations of risk. You can also use Scripbox’s Sukanya Samriddhi Yojana Calculator and estimate the maturity amount and wealth created.
Taxation on mutual funds is a complex topic. Taxes paid on your mutual fund investments vastly depend on factors such as what kind of funds you have invested in, the duration of your investment, which income tax slab you belong to and so on.