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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.

What is Sukanya Samriddhi Yojana?

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.

Eligibility Criteria for Sukanya Samriddhi Yojana

The following are the eligibility criteria:

  1. The girl child must be ten years of age or younger.
  2. The guardian or either of the parents of the girl child can open the account.
  3. Only one account can be opened per girl child.
  4. A family can open a maximum of two SSY accounts, i.e. secure two girls under this scheme.
  5. In the case of twin girls, the guardian or parents can open a third account.

Interest rates on Sukanya Samriddhi Yojana

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%.

Tax Exemption under Sukanya Samriddhi Yojana (SSY)

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.

How to invest in Sukanya Samriddhi Account Scheme?

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

  • Birth certificate of the girl child
  • Address proof of the applicant parent or guardian 
  • Photo ID of the applicant parent or guardian
  • KYC proofs i.e Aadhar card, PAN, Voter ID, and Passport

Critical features and benefits of Sukanya Samriddhi Yojana scheme

FeaturesRequirements
Amount of investment The minimum amount of investments must be Rs 250
The maximum amount of investment can be up to rs 1.5 lakhs
Maturity of investmentThe account matures once the girl child is 21 years of age or on occasion of marriage after attaining 18 years of age
Investment PeriodThe 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 defaultAn account is held ‘Account under default’ if the minimum amount of investment is not made in a financial year.

What is the benefit of Sukanya samriddhi scheme?

Sukanya Samriddhi Yojana scheme was introduced as a part of Beti Bachao, Beti Padhao initiative. This scheme provides various benefits for the girl child – 

  • Investing in SSY provides tax benefit up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act, 1961. 
  • The minimum amount for investment in a year is Rs. 500, giving the parents/guardian a flexibility for depositing money. The maximum that one can deposit in a year towards SSY is Rs. 1.5 lakh. 
  • The government of India backs this scheme. Thus, there is a guarantee of returns for the girl child. 
  • There is a higher fixed rate of return when compared to other government-backed tax savings schemes such as PPF. (the current rate of interest is 7.60% p.a for FY 2020-2021)
  • One has to stay invested in this scheme up to 18 or 21 years of the girl child, and it gives a benefit of the power of compounding for long term investment. 
  • The maturity proceeds of the SSY account are paid to the girl child along with the accrued interest. This gives financial independence to the girl child at that age.
  • A unique benefit of SSY is that even after maturity, if the account is not closed by the account holder, interest shall be payable till the final closure of the account. 
  • The parent/guardian operating the SSY account can get it transferred from one part of the country through another (bank/post office) in case of their transfer. 

Sukanya Samriddhi Yojana (SSY) withdrawal rules

You can withdraw the investment amount in the scheme after the completion of 15 years of investment or premature or partial withdrawal.

Withdrawal on investment maturity

On maturity of the investment, the principal amount and interest can be withdrawn. The withdrawal is allowed on submission of the following documents:

  • Application form for withdrawal
  • ID proof and address proof
  • The withdrawal is allowed for higher education if the girl child attains the age of 18 years and completed her 10th standard. The amount withdrawn must be used for paying the admission fee or any other fee charged by an educational institute.
  • The proof of admission to an education institute must be presented while applying for withdrawal. The proof of admission such as fee receipt, admission card, and student ID.
  • The maximum amount that can be withdrawn is 50% of the total amount available in the previous financial year. The amount can be withdrawn in 5 installments or at once.

Premature withdrawal of investment

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.

Mutual Fund alternate to Sukanya Samriddhi Yojana (SSY)

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.

What is the children’s mutual fund?

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.

Investment options for girl child

Comparison between Sukanya Samriddhi Account and Children’s Mutual Fund

ParticularsSukanya Samriddhi AccountChildren’s Mutual Fund
Who can opt for the scheme?Only a girl childCan be opted for both girl child and boy child
Age LimitThe girl child must be of 10 years of age or youngerThe child can be 18 years of age or younger
Limit on accountsA maximum of 2 accounts per familyNo such limit
Return on investmentInterest rate is fixed by the government and reviewed quarterlyInterest income depends on the performance of the funds in the market
Tax BenefitThe principal amount, interest earned and maturity proceeds all are tax-freeNo tax implication until the redemption of the fund. On redemption benefit of indexation is available.
RiskNo 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

Conclusion

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.

Frequently Asked Questions

Which bank is best for Sukanya samriddhi Yojana?

There are many banks that are authorized to offer Sukanya Samriddhi Yojana. Also, one can open an SSY account at a post office. However, one has to physically visit an authorized bank or post office to open an SSY account. There is no online facility for SSY account opening by any bank or post office as of now. But once the account is opened after the submission of all documents, one can set a standing instruction online.
It is important to note that, if a deposit is not made every year, the account will fall under “Account under the default”. Hence, one can visit the nearest authorized bank or post office for opening a Sukanya Samridhi Yojana account based on their convenience. 

Can parents withdraw money from Sukanya samriddhi account?

The parent/guardian can withdraw their money from the Sukanya Samriddhi account as and when they need it. However, the girl child has to be 18 years of age before the parent/guardian withdraws money from her account. Furthermore, the parents can withdraw only 50% of the total corpus for fulfilling the purpose of higher education or marriage of the child. Also, proof of admission if required if the amount is withdrawn for higher education purposes.