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
hello
i want know if i would deposit rs 1000 per month how mutch i will get complet the 21 years…
Hi Mukesh,
Please check this post to know the maturity value after 21 years – http://www.onemint.com/2015/03/09/sukanya-samriddhi-yojana-calculating-maturity-value-after-21-years/
my daughters dob is 03-11-2003 is she is eligible for this scheme
No, your daughter is not eligible for this scheme.
Hi Sir,
my daughter’s birthdate is 10-03-2009.
can we open account for her.
Hi Awadhesh,
Yes, you can do that.
hello sir
iam amit from himachal mt suster have a girl child she live with us right know so i wants to open account for girl child right know she is 3 year and 6 months only do we eligible or not .
Hi Amit,
Your niece is eligible for this scheme. Your sister can get an account opened for her.
Hi sir ,
If my Daughters D.O.B is 12.9.2002 can i use the scheme or not!!!!!!!!!!
Hi Mr. Gupta,
No, your daughter is not eligible to invest in this scheme.
Hello sir ,applicable any last date please reply
Hi,
There is no last date for this scheme. You can invest whenever you want.
dear sir my daughter dob is 31-01- 2009 if she married before 21 years then she can eligable to take amt after 21 yrs
Hi Praveena,
You will have to close your daughter’s account as & when she gets married, whether she gets married before attaining the age of 21 years or after.
Hello sir.
My daughter date of birth is18.08.2009 can i join this scheme if i need 2 scheme its possible or not
Thank you
Hi Stalin,
Yes, you can get an account opened in your daughter’s name. You can open only one account in a girl child’s name and a maximum of two accounts in two daughters’ names.
hello sir,
my doughyer’s birthdate is 31 jan 2004.
can we open aaccount for her.
Yes, you can do so.
Hello sir,
Thanks for the info on SSY, if the child girl is 10 years old the minimum duration of the scheme will be 8years in case the marriage of girl. Then how much amount will get in closing if RS.1000 paid per month…
Hi Jaya,
Based on certain assumptions and 9.1% rate of interest, it should be Rs. 1,41,538 after 8 years.
Hello Sir , Thank you for sharing the features of SSY. I already have a ppf Account in SBI in my daughter’s name. Can { open a SSY account for her and deposit money in it also?
Hi Aravind,
Yes, you can do that.
Hello sir,
My daughter is 12 years old can i follow this scheme.
Hi Renuka,
If your daughter’s date of birth falls before December 2, 2003, then she is not eligible to invest in this scheme.
Hiiii Shiv sir…
Is sakim k tahat 21yrs by birth
ya fir hm jab iss account ko kholenge tab se count kenge plzzz sir reply krna.
Hi Surenderji,
Jis date se aap account kholenge, us date se 21 saal count honge.
Hello sir,
Sukanya Samriddhi Yojana – Tax-Free Small Savings Scheme for a Girl Child. How much amount we can get after 21 years.
Hello Mr. Sriram,
Please check this post for maturity amount – http://www.onemint.com/2015/03/09/sukanya-samriddhi-yojana-calculating-maturity-value-after-21-years/
Hello Sir , Thank you for sharing the features of SSY , many young parents are welcoming this initiative by our PM.
When discussing with few experienced people , one concern raised is whether the SSY will remain the same way if the existing government changes .
Could you throw some light on this matter.
Regards
Hi Rahul,
My guess would be as good as yours Rahul. Nobody knows what is going to happen tomorrow, so how can I predict what is going to happen four-five years down the line. If this government stays, then this scheme might remain operational for the next 10 years or probably more. So, I think we should just focus on the scheme based on its current features only.
Hi Shiv,
Thanks for your Information. I would like to know for SSY in one year(12 months) how many times the depositor can deposit the money in an account?
Thanks,
Hi Sanjeev,
There is no such limit, you can deposit money in this account as many times as you want.
Sir,
Gudevening!
Thanks for giving us a excellent saving scheme of S.S.V.
My daughter is 3months,can we eligible for this scheme&pls suggest.
Hi Krishna, Good Evening!
Yes, you can open an account for your daughter.
Hi Shiv,
Thanks for the valuable info. Below are some facts about this scheme.
1. I am more interested to open in Banks due to online transition facilities.
2. No Bank is interested to open this account.
3. I am based in Janak Puri, Delhi. I have visited all SBI, PNB and BOB branches nearby but everyone said they are not authorised.
4. Only Post Office is opening the accounts.
Government is launching couple of schemes but on the ground level, no support providing to the people. They should launch some helpline no. to address concerns.
Best Wishes,
Kanwal Jayot
Thanks,
1. Even I would do the same for my brother’s daughter.
2. I know; probably they haven’t received the required guidelines.
I hope the government will soon provide the necessary basic infrastructure to open these accounts.
Hi,
Can I claim this deposit in F.Y. 2014-15? Pleae reply asap.
Yes, you can do that.
Hi
On maturity – who can withdraw the amount- parent or child
who will get the money
Girl Child