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
ho bharu aami vrshala 1000 …pn 21 vrsha nantar kay milnar???? babaji ka thulu….please details
Meri bachika age 5 yer har sal my 50000 hajar diposit karuga tho 14 sal ke bad kitna Ayega
Ye scheme 21 saal ke liye hai, 14 saal ke liye nahin.
Dear shiv,
Thanks for the use full information.
Can u please share me the calculation part that how the maturity amount is calculated.
Hi Mukesh,
Rs. 1,000 invested every year would result in Rs. 28593, which would compound to Rs. 52,605 on maturity. This is an approximate maturity amount and certain assumptions have been made.
Can i deposit 1.5 lakh each in my ppf account and also in sukanya samriddih yojna
Thanks
Yes, you can do that.
My child DOB 30/12/2014 I am eligible for this account
Hi,
Yes, you girl child is eligible for this scheme.
Hi,
My child DOB 30/12/2003 I am eligible for this account.
Hi,
Yes, you girl child is eligible for this scheme.
hi,
I wanted a clarification. I want to invest in my neice’s name though I am not her legal guardian.And if I invest around 3ooo p.a what would be the maturity amount. she will be turning 1 yr this April
Hi,
You cannot invest in your niece’s name if you are not her legal guardian.
I am really very thankful of Government for this Perfect Aadhar for every Indian who having Girl child. I want to know about Only 2 things. That if I opened. An account of my daughter. And suppose in between I Died. Then what happen. Is this account will run by government? Like Lic Child plan. … and 2nd thing is… can I get ready recner calculation of this skim.
Hi Riyaz,
No, the government will not fund your child’s account in your absence. You can make a request to prematurely close the account and withdraw the amount under special circumstances. Moreover, ready reckoner calculation is still not available for this scheme.
Hi Shiva,
Good work, thanks for sharing a lot of information on this good scheme.
Thanks Rajesh for your kind words! 🙂
Hi, My baby is 8th month old i am going to invest on this scheme, But before i invest i want to ask you something, Does this scheme runs the same though if the Government Changes from BJP- congress – or any other Party ?? will we get the same Benefit as this scheme has Promised please clear this as soon as possible i want to go for this today it self
Hi,
Interest rate is subject to a change every year on April 1. However, I have no idea whether any of the political parties would change the terms of this scheme in future or not. Personally, I don’t think they would do any such thing. Rest it is your decision.
Dear Shiv
Hope you are doing good. I can see your good work is continuing . I am a NRI but planning to relocate back to India this year. My family is still resident Indian. My question is after shifting back how much time i need to wait before opening an account for my daughter?? Also, is it possible for a resident Indian To have a PPF a/c for self, PPF a/c for Child & this samridhi a/c for child and contribute around 4.5 lakh annually (tax deduction of only 1.5 is OK).
Regards
Kunal
Thanks Kunal,
A resident Indian can open this account anytime he/she wants. So, when your residential status changes back to that of a Resident Indian, you can open this account. For PPF, the total amount that you can invest in your account and your child’s account both put together is only Rs. 1.5 lakh. Additionally, you can invest Rs. 1.5 lakh in this scheme. So, total Rs. 3 lakh, instead of Rs. 4.5 lakh as planned.
Hi’ may we know wat happens if the depositor or guardian who is in charge of the savings die?
You can make a request to prematurely close the account and withdraw the amount under special circumstances.
Sir
My daughter date of brith 10/04/12 ki hai to kiya mein ya yojana khol sakta hu our sir ya year mein ek baar he dhenaa hoga
Yes Rajeshji, aap apni beti ka account khulwa sakte ho. Aur saal mein ek hi baar deposit karna hoga.
Hi Shiv,
My Daughter is 2007 born, so if I open an a/c now till what time will it remain operational and yield interest, which of the below does it pertain to.
a. Till she attains the age of 21.
b. Untill she gets married irrespective of the age.
c. Scheme is operational for a period of 21 years irrespective of her marriage.
d. Any other scenario other than the ones mentoned above.
Hi Prasun,
It is a mix of b. & c. Maximum duration of the scheme is 21 years from the date of opening the account or till your daughter gets married, whichever is earlier.
Hey Shiv,
Thanks a lot for the information.
One last thing, if I intend to invest 60K annually for 15 yrs, is this scheme a better scheme or equity option s better.
It varies from individual to individual. Personally, I’ll opt for equity mutual funds. Thanks!
Sir ,provide link for form.this scheme
Here you have the post in which the link is also there – http://www.onemint.com/2015/03/04/sukanya-samriddhi-yojana-application-form-list-of-banks-to-open-an-account/
Sir I want know how much money Will receive after 18year when deposit yearly 1000 rupya..for my daughter. When I stardeposit. 1/4 /15…please reply… I waiting..
.
This scheme is for 21 years and not 18 years. After 21 years, you’ll get approximately Rs. 52,605, if interest rate remains 9.1% throughout this period.
sir
kindly confirm this is monthly investment plan it means we have to deposit same amount on every month.( yes or no ) , 2 if yes than i some time i will not able to pay for some month that what will be penalty. 3 is there is ECS available or not ?
Hi Rohit,
1 & 2. No, this is not a monthly investment plan. You need to deposit a minimum of Rs. 1,000 only once a year.
3. It is still not clear whether any kind of ECS facility will be there or not.
Hi Shiv,
Any clarity yet on the list of banks / branches where one can open the account?
Thanks,
No, not yet.
Dear sir
Please let me know simply, If one deposits 6000 thousand annual , what amount would be received by the a/c holder at the maturity
Approximately Rs. 3,15,630, if the rate of interest remains 9.1% for all 21 years.
sir kya har month deposit karna hoga ya ek sal me ek bar………
Saal mein ek baar karna zaroori hai, har mahine karna zaroori nahin hai.