The Union government’s ‘Sukanya Samriddhi Yojana’ is a savings scheme designed to benefit girl children as part of the “Beti Bachao – Beti Padhao” initiative. The scheme was initiated in 2015 with an aim of improving lives of girls in the country by eliminating sex determination, gender discrimination, protecting girls, and increasing girls’ participation in education and other fields. A parent or guardian of a girl child aged 10 or younger can open an account under this scheme, which offers a higher interest rate as well as several tax benefits.
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The account can be opened in post offices and authorised banks. Currently, the SSY scheme’s interest rate has been reduced from 8.4% to 7.6%, and it is compounded annually. Interest is not payable once the scheme’s duration has expired or if the girl becomes a Non-resident Indian (NRI) or a non-citizen. The government determines the interest rate, which is calculated quarterly.
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Key pointers related to the scheme
– The account matures after 21 years of opening or, in the event of the marriage of the girl child after she gains the age of 18 years
– A premature withdrawal of up to 50% of investment is permitted after the child reaches the age of 18, even if she does not marry.
Minimum annual investment: ₹1,000
Maximum annual investment: ₹1.5 lakh
– Upon account maturity, the balance (principal and interest earned) is paid to the girl child upon submission of an application along with proof of citizenship, residency, and identity.
Eligibility
– The account can be opened by the girl child’s parent or legal guardian.
– The girl child must be under the age of ten.
– A girl child may only have one account.
– A family can only have two SSY scheme accounts.
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Tax benefits
– Investments are tax deductible under Section 80C of the Income Tax Act.
– An annual deduction of up to 1.5 lakh is permitted.
– The interest accrued is exempt from tax payment under Section 10 of the Income Tax Act.
– Proceeds received upon maturity/withdrawal are also exempt from taxation.