This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in
“Beti Bachao, Beti Padhao” is the mantra with which Prime Minister Narendra Modi launched Sukanya Samriddhi Yojana on January 22nd this year. Later on, the government issued a notification to allow 80C exemption equal to the amount invested in the scheme up to Rs. 1,50,000, which is also the maximum amount one can invest in this scheme in a financial year.
Now, the Finance Minister in his budget speech has proposed to make the interest component as well as the maturity proceeds as tax-free. I think this proposal has made this scheme to be the best small savings scheme available to the Indian investors. Yes, even better than our golden scheme of Public Provident Fund (PPF). So, what is this scheme all about? Let’s check.
Sukanya Samriddhi Yojana is a small savings scheme which can be opened by the parents or a legal guardian of a girl child in any post office or authorised branches of some of the commercial banks. The girl child is called the “Account Holder” and the guardian is called the “Depositor” in this scheme.
Before I compare this scheme with PPF, let us first check the important features of this scheme.
Salient Features of Sukanya Samriddhi Yojana
Who can open this account? – Parents or a legal guardian of a girl child who is 10 years of age or younger than that, can open this account in the name of the child. For initial operations of the scheme, one year grace period has been provided to make it 11 years of age. With this one year grace period in age, which is valid up to December 1, 2015, you can get this account opened for a girl child who is born between December 2, 2003 and December 1, 2004.
9.1% Tax-Free Rate of Interest – This scheme has been flagged off with a 9.1% rate of interest, higher than that of PPF which stands at 8.7%. But, this rate is not fixed at 9.1% for the whole tenure and is subject to a revision every financial year like all other small savings schemes, including PPF.
Prior to the budget announcement, 9.1% annual return seemed unattractive, but not anymore, as it has been made tax exempt now. Interest amount gets added to your balance amount in the account and compounded either monthly or annually, as per your choice. Monthly interest compounding will be done only on your balance amount on completed thousands.
Duration of the Scheme – The scheme will mature on completion of 21 years from the date of opening of the account. If the account is not closed on maturity after 21 years, the balance amount will continue to earn interest as specified for the scheme every year. In case the marriage of your daughter takes place before the maturity date i.e. completion of 21 years, the operation of this account will not be permitted beyond the date of her marriage and no interest will be payable beyond the date of marriage.
Deposit for 14 years only – Though the scheme has a duration of 21 years, you are required to make contributions only for the first 14 years, after which you need not deposit any further amount and your account will keep earning the interest rate applicable for the remaining 7 years.
Premature Closure – The account can also be closed prematurely as your daughter completes 18 years of age provided she gets married before the withdrawal. As the maximum permissible age of the girl child is set as 10 years, the scheme effectively carries a minimum duration of 8 years i.e. 18 years of exit age – 10 years of entry age.
Partial Withdrawal – It is also allowed to withdraw 50% of the balance standing at the end of the preceding financial year, but only after your daughter attains the age of 18 years. So, effectively it has a complete lock-in period of at least 8 years, before which you cannot take out any money for any purposes.
Minimum/Maximum Investment – You need to deposit a minimum of Rs. 1,000 in a financial year to keep your account active. Failure to do so will make your account inactive and it could be revived only after paying a penalty of Rs. 50 along with the minimum amount required to be deposited for that year, which currently stands at Rs. 1,000.
Also, you can invest a maximum of up to Rs. 1,50,000 in a financial year. You can make your contribution to this account in as many number of times as you like.
How many accounts can be opened? – You can open only one account in the name of one girl child and a maximum of two accounts in the name of two different children. However, you can open three accounts if you are blessed with twin girls on the second occasion or if the first birth itself results into three girl children.
Nomination Facility – Nomination facility is not available in this scheme. In an unfortunate event of the death of the girl child, the account will be closed immediately and the balance will be paid to the guardian of the account holder.
Documents Required – Birth Certificate of the girl child, along with the identity proof and residence proof of the guardian, are the mandatory documents required to open an account under this scheme. You can approach any post office or authorised branches of some of the commercial banks to get this account opened.
Sukanya Samriddhi Yojana vs. Public Provident Fund (PPF)
Budget 2015 has made this scheme quite attractive for the investors. If you’ve already exhausted your PPF deposit limit, want to save for your girl child’s marriage or higher education and have spare money to invest in this scheme, then this scheme provides you one more excellent avenue of safe investment with high returns. You can wait for the next financial year’s rate of interest to get announced anytime this month, if it remains higher than PPF, just go for it.
Application Form to open a Sukanya Samriddhi Account
List of authorised commercial banks where you can get this account opened
My daughter DOB is 14 April. Whether it is possible to open account in Sukanya Samriddhi Yojana Scheme.
Sir , if i deposit in jan 1000 ,feb 3000& in March 500 ,is it any issues.
My doughter is date of.birth21.05.2015. Please all information given me
My elder daughter is 16 years so can she get this policy or get me better option against it.
Yearly how much should I invest money for my daughter,if I cannot invest money monthly.
Dear sir,
My daughter DOB is 06th june 2008. Whether it is possible to open account in Sukanya Samriddhi Yojana Scheme.
Dear Sir,
Which investment is better? either investing monthly Rs1000 or yearly Rs 12000
Hi,
My daughter was born in Muscat on Mar 2016, passport also issued from Indian embassy Muscat with my Indian permanent address.
I am currently still working in Muscat but wish to start a SSA account in my daughter’s name. Am i eligible to start an account in her name?
Please guide.
my daughter D.O.B. 18 july 2005.
please tell me it is possible? (for this scheme)
is it possible i can deposit ?30000 one year
nd in next year i deposit ?40000
?30000 in 1st year
nd
?40000 in 2nd year
Dear sir
Sukanya yojna ke tahat yadi beech me amount nahi bhar saka to usko nikalne process kya hai please help me
My daughter’s dob is 01-12-2007, can we apply for sukanya yojana in any bank? Please reply to my query.
My daughter DOB is 24 March 2008. Whether it is possible to open account in Sukanya Samriddhi Yojana Scheme.
My elder daughter is 11 years so can she get this policy or get me better option against it.
I just want to know if father will be died after 3 or 4 year what will benefit my doughter
just i want to know about my daughter she is now 16 years which one for her best policy
Dear sir,
My daughter is DOB 16 April 2010
Pls all information given
Dear sir,
We want to open this account in Rajesthan State but my id and Address proof is made from Delhi then We can open this account in Rajesthan if not, then what should we do for it.
Thank you
my daughter dob 07.08.2009 please deatils the plan