This scheme that was floated under the Beti Bachao, Beti Padhao initiative, is a good option for parents to invest in their girl child’s future. Before we learn about the various advantages of the Sukanya Samriddhi Yojana, let’s understand the features –
Features of Sukanya Samriddhi Yojana
Only parents or legal guardians of a girl child can open an account on her behalf. A family can invest for up to 2 girls only.
The family must open the SSY account before the girl child attains the age of 10 years and the account matures after 21 years from the date of opening the account. However, this limit of 21 years is not applicable if the girl gets married before the expiry of the tenure. The Sukanya Samriddhi account will not be operational after the wedding.
The minimum amount that can be invested is ₹250 per year and the maximum amount can be ₹1,50,000 per year. If in any year the minimum amount is not invested, it is considered that the account is under default and the account can be revived on payment of a small penalty.
How does the Sukanya Samriddhi Yojana work?
A family can open an account for the girl child at a post office or authorised bank. While some prefer to physically visit the post office or bank for opening an account, most authorised banks also do this process online.
Every year a deposit has to be made into the SSY account and these deposits are to be made till the completion of 15 years from the date of opening the account. No deposits are to be made from the 16th to 21st year. These deposited amounts will continue to accumulate till maturity.
The account will earn an annual interest as fixed by the government of India. This interest is calculated on the lowest balance in the account between the close of the fifth day and the end of the month. Thus, it is advisable to make deposits within the first 4 days of a month.
On maturity, the child will receive the accumulated principal, as well as, accrued interest of the entire tenure. While the Sukanya Samriddhi Yojana account is opened and operated by the parents or guardian of the girl child, after the age of 18 the girl can operate her own account by submitting necessary documents.
Partial withdrawal of up to 50% of the accumulated amount is permitted only after the girl turns 18 years of age to meet specific requirements like higher education or marriage.
Premature closure is only permitted in case of the demise of the girl child, financial inability of the depositor to make contributions or the girl child getting married after attaining the age of 18 years.
Advantages of Sukanya Samriddhi Yojana
One of the biggest advantages of this government-backed product is the fixed returns that it provides to investors. At present, the interest rate of 7.6% per annum from this scheme is higher than the interest received from bank deposits and few other small savings scheme instruments, making it a reliable way for families to invest for the higher education or marriage of the girl child.
“While the interest returns from the SSY are higher than few other products, you must remember that the Government revises this rate quarterly and the trend has definitely been downward. From the 9.2% interest when this scheme was launched in 2015 to the 7.6% interest now, the reduction has been consistent and it is only expected to reduce over time”, explains Deepali Sen, founder partner at Srujan Financial Services LLP.
By investing in the Sukanya Samriddhi Yojana scheme, an investor will not only start securing the future of the girl child but also get tax benefits. The SSY scheme has the EEE (Exempt, Exempt, Exempt) status, that is, under Section 80C the annual deposits, interest accrued and the amount withdrawn on maturity are all exempted from tax up to ₹1,50,000 per year.
“The guaranteed interest is definitely a great way for families to accumulate a corpus for the girl child. However, the reducing interest rates coupled with a maximum limit of ₹1,50,000 contribution per year may be inadequate to meet the child’s needs. Hence the overall strategy for a family should be to combine equity investments along with contributions to the Sukanya Samriddhi Yojana”, says Sen.
Thus, for families looking at a fixed income product to supplement their equity investments for the higher education or wedding of their daughters, the Sukanya Samriddhi Yojana is a good option to look at.
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