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
Hi,
My daughter’s DOB is 10.11.2003. Can i open the Sukanya Samriddhi Account in her name? Kindly confirm.
Regards,
JITENDRA RAJ
Hi,
No, you cannot open an account for your daughter.
Sir,
I have 3 question.
1. How this interest is compounded quarterly on rest / half yearly on rest?
2. Under which section interest earned is exempted from tax ?
3. Can the deposit amount be different in different years or a fixed amount need to be deposited every year ?
Hi,
1. Interest is compounded annually or monthly, as per your choice.
2. Interest will be tax exempt under a new section 10(11A) of the Income Tax Act.
3. Deposit amount can be different every year.
There should be a compulsory to deposit same amount per annum.. Can i deposit ammount according to my savings..
Yes, you can do that.
my daughter dob is sept2014 and if i invest 2000 pa so for how much i have to pay in total what i get after the maturity.
hi sir
my daughter was born on 29.9.2008
if I invest 500 rupees per month .
how much of amount can I get at the age of 21 years of my child from right now
Sir my daugter will b 8 years of age in may 2015. If invest 150000 per annum wat shall b maturity amount. Thanking u in anticipation
What will be the maturity value for this scheem for investment of Rs.1000/pa. Please inform. Really it is a good plan by BJP Govt. Hoping other Govt. will not Spoil it.
Ramakrishna VN
9845460580
Based on certain assumptions and 9.1% rate of interest, it should be Rs. 52,605 after 21 years.
wat is the calculation for the deposit amount of Rs.1000 per annum and return amount is approx 600,000/- six lacs only .
Based on certain assumptions and 9.1% rate of interest, it should be Rs. 52,605 after 21 years against deposit of Rs. 1,000 every year.
sir i have an account in post office . is there opction to pay online payment
I don’t think Post Offices provide online payment facility.
can i pay through online payment
Hello Sir,
I already have opened Sukanya Samriddhi Account in the name of my daughter. But the name of the Guardian mentioned in the A/c is my wife’s name.
Now, I just want to know whether it is possible to change the name of the Guardian after opening the Sukanya Samriddhi Account! I want it in my name such that I can get the benefit under Sec. 80(C).
If yes, kindly let us know the process.
Regards,
Hi Prabhakar,
I have no idea how to change the name of the guardian in this scheme, you’ll have to approach the post office to get the required info.
Hi,
My Daughter age 1yr, if I can start now this scheme with annually 50000 what is the amount after complettionof scheme please conform.
Hi,
Based on certain assumptions and 9.1% rate of interest, it should be Rs. 26,30,250 after 21 years.
Dear Mr. Kukreja
Thanks a ton for sharing such a wonderful information
Pls. let me know if I open the account my 11 yrs daughter today, then after how much time 50% of the amount can be withdrawn…..is it after 7 years ie when she will be 18 yrs…..or correct me if i m wrong
Yes, that is correct, after 7 years when your daughter turns 18, you can withdraw 50% of the balance.
now my child dob is 5 july 2013 . if i open acccount starting from 1000 annually. so what can i get for her maturity time ..
Based on certain assumptions and 9.1% rate of interest, it should be Rs. 52,605 after 21 years.
ye accout sirf post office me hai ya bank me bhi chalega kon si bank me chalega pl
Please check this post – http://www.onemint.com/2015/03/04/sukanya-samriddhi-yojana-application-form-list-of-banks-to-open-an-account/
hi
weather the amount i deposited in this account will come in tax saving (80c) or only the interest what we will get is tax free ?
Hi Venkat,
Yes, the deposited amount is eligible for 80C deduction as well. Interest received is also tax exempt.
Hi,
My Child DOB is 23.12.2015. Can i open the Sukanya Samriddhi Account in her name? Kindly confirm.
Regards,
Ranbir Singh
Hi,
My child DOB 23/12/2015I am eligible for this account.
Hi Ranbir,
You mean 23/12/2014? If yes, then your daughter is eligible.
Hi,
My daughter’s DOB is 21.09.2003. Can i open the Sukanya Samriddhi Account in her name? Kindly confirm.
Regards,
Amit Kaushik
Hi Amit,
No, your daughter is not eligible for this scheme.
My Daughter is born on 27/02/2006, Now she is 9 year old. If I Start Sukanya Samriddhi Account, In the year 2024 she will become 18 year old girl, In the year 2027 she will become 21 year old. In the year 2027 She will get amount of Rs.6,50,000. Please confirm because I am Confuse how it works…
This scheme is for 21 years (and not that the girl child attains 21 years of age). So, if you start it today, it will run till March 2036 or till the date when your daughter gets married, whichever is earlier. Also, maturity amount is not fixed, it will vary as per your contribution, timing & the rate of interest.