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Sukanya Samriddhi Yojna

Sukanya Samriddhi Yojana (SSJ) was notified on 2nd December 2014 by the Central Government of India. This scheme is launched to tackle the basic problem associated with the girl child in the Indian community i.e. marriage and education. SSY is a scheme for systematic investment by the parents of the girl child to have sufficient funds for her education and marriage.

Rules of Sukanya Samriddhi Yojana

The opening of SSY Account

An account called SSY Account is required to be opened by the natural or legal guardian of the girl child. This account can be opened at any time before she attains the age of ten years.

Other Points

  • Guardian shall open and operate only one account in the name of the girl child. Multiple accounts are not allowed for the same girl child.
  • Guardian shall be allowed to open a maximum two accounts for two girl children only. The third account can be opened in the event of the birth of twins girls as second birth or if the first birth itself results in three girl children’s.
  • SSY account can be opened in post offices and commercial bank branches (such as State Bank of India, Bank of Baroda, Punjab National Bank etc.) authorised by Central Government.
  • A girl child is eligible for an SSY account only if she is a resident Indian citizen at the time of opening of the account and remain so until the maturity or closure of the account. The scheme is not available for Non-resident and if there is a change in residential status or citizenship during the period of the scheme then no interest shall be accrued from the date of the change in residential status or citizenship and the account will be considered closed.

Deposits

  • SSY Account may be opened with an initial deposit of Rs. 1,000 and thereafter any amount in multiples of Rs. 100.
  • The minimum amount of Rs. 1,000 is required to be deposited in each financial year (01st April to 31st March) subject to the maximum amount on a single occasion or multiple occasions during a financial year should not exceed Rs. 1,50,000.
  • Deposits in the account can be made till completion of the fourteen years from the date of opening of such account.
  • An irregular account (in which minimum Rs. 1,000 per financial year has not been deposited) may be regularised by paying a penalty of Rs. 50 per year along with the minimum deposit for the years of default at any time before the completion of the fourteen years from the date of opening of the account.
  • The deposit can be made in cash or via account payee cheque or demand draft. Where the payment has been made using account payee cheque or demand draft then the date of encashment of the cheque or draft shall be the date of credit to the account.
  • Deposit made in the account is eligible for deduction under Section 80C subject to maximum limit of Rs. 1,50,000.

Interest on Deposits

  • Interest offered under SSY account is the highest amount all Small Saving Scheme. The current interest rate is 8.1%.
  • The interest rate shall be notified by the Government for every year. The rate of interest is 0.75 bps or 0.75% more than the comparable G-Sec yield.
  • Interest shall be compounded annually.
  • Interest shall be calculated for the calendar month on the lowest balance in an account between the close of the 10th day and the end of the month.
  • The account holder can opt for monthly interest, the same shall be calculated on the balance in the account on completed thousands. The interest will be credited to the account balance and the remaining amount in fractions of thousand will continue to earn interest at the prevailing rate.
  • Interest shall be payable on the balance in the account till the final closure of the account even after the account gets This is the one of a most unique feature of this scheme.

Maturity of Account

  • The account shall mature on completion of 21 years from the date of opening of the account.
  • The account shall also be considered matured if the marriage of account holder take place before the completion of 21 years from the date of opening of account provided that the account holder is not less than 18 years at the time of marriage.
  • No operation is permitted once the account gets matured however the interest will keep accruing until the account is finally closed by the account holder.

Pre-mature Closure of Account

  • In the event of the death of the account holder, the account shall be closed immediately. The balance at the credit of the account along with interest (till the month preceding the month of premature closure of the account) to the guardian of the account holder.
  • Where the Central Government is satisfied that operation or continuation of the account is causing undue hardship to the account holder, it may, by order, for reasons to be recorded in writing, allow pre-mature closure of the account only in cases of extreme compassionate grounds such as medical support in life-threatening diseases, etc.

Withdrawal from Account

  • For the purpose of higher education and marriage, up to 50% of the balance at credit at the end of the preceding financial year shall be allowed to withdraw.
  • Withdrawal from the account is allowed only when the account holder girl child attains the age of 18 years.

Tax Benefit under SSY Account

SSY account comes with Exempt-Exempt-Exempt (EEE) status i.e.

  • The contribution made to SSY account is eligible for deduction under Section 80C of Income Tax Act, 1961 subject to a maximum limit of Rs. 1,50,000
  • Interest accrues against this account which gets compounded annually is also exempt from tax under Section 10(11A) of Income Tax Act, 1961.
  • Withdrawal proceeds (pre-mature or on or after maturity)are also exempt from tax under Section 10(11A) of Income Tax Act, 1961.

Comparison between Public Provident Fund (PPF) and Sukanya Samriddhi Account

Particulars PPF PPF
Eligible Person Any Indian Citizen Only girl child of less than 10 years of age can open an account through parents or guardian
Maximum Investment Rs. 1.5 Lakh/year Rs. 1.5 Lakh/year
Minimum Investment Rs. 500/year Rs. 1,000/year
Interest rate for 2015-16 8.7% 9.2%
Deduction allowed  under section 80C under section 80C
Interest and withdrawals Tax-free Tax-free

About Prateek Agarwal

Prateek Agarwal is a Practicing Chartered Accountant from Jaipur and been in practice for more than 7 years. He writes mainly about GST and Finance.

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