Sukanya Samriddhi Yojana – Should You Invest in It?
Updated: Oct 22
Education is amongst the most important financial goal for any parent. Amidst all the various investment options available to you, one attractive option is the Sukanya Samriddhi Yojana. Today let us explore the features of this scheme and find out whether you should invest in this scheme or not.
Table of Content
Most Asked Questions
What is Sukanya Samriddhi Yojana?
On January 22, 2015, the Government of India initiated a social campaign with the primary goal of addressing the issue of the decreasing child sex ratio in our nation. The movement called Beti Bachao Beti Padhao (BBBP) aims to educate and protect girls by spreading the phrase "Save girls." The Ministry of Women and Child Development, the Ministry of Health and Family Welfare, and the Ministry of Human Resource Development are all involved in this national endeavour. The objectives of BBBP are as follows:
To limit sex determination and ban gender discrimination against minors.
To foster females' safety and survival.
To ensure that girls are more involved in school and other fields.
The goal of SSY is to address a significant issue that affects girl children, specifically the cost of marriage and schooling. Its goal is to ensure that girls in India have a bright future by helping their parents save money for their child's appropriate education and carefree marriage. For this reason, Sukanya Samriddhi Account was introduced by SSY.
The table below shows the overview of this initiative
Investment value | Minimum value – Rs.250 Maximum value – Rs.1.5 lakh p.a. |
Current yearly interest rate | 8.2% p.a. |
Timeline | Within 10 years of birth of a girl child |
Maturity value | Varies depending on the value invested |
Maturity duration | 21 years from the investment date |
What are the features of Sukanya Samriddhi Yojana?
Launched by the Government in 2014, its objective is to help parents of girls to accumulate a decent corpus for their education and marriage.
The account can only be opened by Indian residents for their Indian resident daughter(s).
The age of the girl child should be below 10 years at the time of opening the account.
You can open only one account per girl child and a maximum of two accounts for two girl children. There are certain relaxations given for twins and triplet children.
The minimum initial deposit amount is INR 250. The total amount deposited in a year is INR 1.5 lacs per account.
The account can be opened in a Government-authorized bank or a post office.
The present Interest rate (2021) is 7.6%. However, note that the Government notifies new rates every quarter, and hence the interest rates are subject to change.
You can get a tax benefit under Section 80C for your investment in the scheme. The interest that you earn in the account every year and the maturity proceeds are entirely tax-free.
There is no risk of loss of money as it is a Government-backed scheme.
The scheme matures on completion of 21 years from the date of opening the account or on the marriage of the girl child, whichever is earlier.
You can make a deposit in the account only for 15 years. After that, the account continues to earn interest as per the rates prevailing at that time.
You can withdraw up to 50% of the money from the account for higher education purposes or the actual fee charged by the educational institution, whichever is lower once the child attains the age of 18 years. You will need to submit some documentary proof of fee demand to claim the withdrawal.
You can also withdraw money and close the account in case of your daughter’ marriage. In that case, you need to file an affidavit that the child is above 18 years of age.
Sukanya Samriddhi Yojana: Key Points
Opening SSY Account: A young girl is limited to one SSY account. Any post office or approved bank branch can open SSY accounts. It can be left open till the girl child turns ten years old.
SSY Beneficiary: Under the SSY, any resident Indian female child can get benefits from the moment the account is opened until it matures or is closed.
Deposits made through SSY: Until the girl child reaches the age of 18, the guardian may make deposits and use the account. After the girl kid reaches the age of 18, she will be required to operate the SSY account. For an SSY account, the minimum deposit is Rs. 250, which can be made in multiples of Rs. 50. The maximum deposit is Rs. 1,50,000 for each financial year, up to a maximum of 15 years. Deposits may be done electronically, with a demand draft, with cash, or by check.
Interest on Deposits: For the second quarter of FY 2024–2025, which runs from July 1 to September 31, 2024, the interest rate is 8.2% p.a. This account's interest income is tax-free. If the total amount deposited in an "Account under default" (where a minimum of Rs. 250 per year has not been deposited) is not regularised within the allotted time, interest will be accrued until the account's maturity date. Within 15 years of the account's establishment, an "Account under default" can be regularised by paying a penalty of Rs. 50 per default year. From the SSY has completed its tenure, or 21 years from the opening of the account, no interest is due. After the girl kid leaves India as a resident or a citizen, there is no interest paid. Any deposit exceeding the annual maximum, or Rs. 1,50,000, will not be eligible for interest and may be withdrawn at any time by the depositor.
Maturity Period: SSY's mature term is 21 years from the date of account opening or, if she marries after turning 18, after turning 18. Contributions, however, are only required for the first 15 years. The SSY account will thereafter keep earning interest until it matures.
What are the benefits of Sukanya Samriddhi Yojana?
For SSY accounts, a minimum deposit of Rs. 250 must be made each fiscal year. Up to Rs. 1.5 lakh can be deposited each fiscal year, whenever it is most convenient for you. Even if you were to miss a year's worth of payments, you will only be penalised Rs. 50 for missing out on the required minimum payment of Rs. 250, after which your account will be restored to normal.
One of the greatest among modest savings plans is the 8.2% annual compound interest rate offered by SSY accounts (for the period of July 1, 2024, to September 31, 2024).
Under Section 80C of the Income Tax Act, you can benefit from a complete tax deduction on principle invested up to ₹1.5 lakh annually. Taxes are not applied to the interest or maturity amounts.
Protect your daughter's future for a period of twenty-one years, or until her marriage at the age of eighteen, whichever comes first.
You can take out 50% of the account balance as of the conclusion of the preceding fiscal year to cover your girl child's school costs. This can only be obtained by presenting proof of admission following the girl child's completion of the tenth standard or age 18 years old.
SSY is a government-backed program, thus returns are guaranteed when it matures.
Any post office in India can transfer funds to any bank, and any bank can do the same.
Tax Benefits Sukanya Samriddhi Yojana
To further incentivise investments in SSY, the SSA has been granted the following tax benefits:
With a maximum threshold of Rs 1.5 lakh, investments in the SSY plan are eligible for deductions under Section 80C.
Under Section 10 of the Income Tax Act, the interest that accumulates and is compounded annually on this account is also tax-free.
Upon maturity or withdrawal, the proceeds are likewise free from income tax.
Sukanya Samriddhi Yojana Interest Calculation
The lowest balance for the calendar month—that is, the amount owed between the fifth and last day of the month—is used to compute interest for the SSY account. Every financial year, at the end, there will be a single interest credit. The formula below is used to calculate its value:
A= P(1+r/n)
Here:
P stands for principal deposit.
r is the interest rate.
n = The number of compound interest years
t = The number of years
A = Total amount at maturity
Eligibility for Sukanya Samriddhi Yojana
An SSY account can only be started by a girl child's parents or legal guardians.
When the account is opened, the girl kid must be an Indian resident under the age of ten.
A girl child may open only one account.
A family may open a maximum of two SSY accounts, one for each girl kid.
Sukanya Samriddhi When a family has a girl born as a first or second birth in twins or triplets, an account can be registered for more than two girls.
Steps to Open a Sukanya Samriddhi Yojana Account
To open the account, you must adhere to the steps listed below:
To open an account, go to the branch of the bank or post office where you want to do it.
Provide supporting documentation and complete the application form (Form-1) with all pertinent information.
Make the initial deposit with a demand draft, check or cash. Any payment between Rs. 250 and Rs. 1.5 lakh is acceptable.
Your application and payment will be processed by the bank or post office.
Your SSY account will be opened after processing. To commemorate the account's opening, a passbook will be provided.
A Sukanya Samriddhi Yojana account can be opened at a post office branch or a bank that is participating in the scheme. If your current bank is one of the cooperating banks, opening an SSY account with them will be more convenient for you. The SSY Account Opening Application Form can be downloaded by going to the websites of the corresponding banks. To open an SSY account, fill out the form and send it to the participating bank.
Steps to Fill Out the Sukanya Samriddhi Yojana Application Form
Include the postal address and Post Office/bank branch data under "To The Postmaster/Manager."
Paste the candidate's photo to the right.
Put the applicant's name next to "I/We" and specify Sukanya Samriddhi Yojana in the space that follows.
Enter the deposit amount in words and figures, then select the payment method (cash, check or direct deposit). Note the number and date shown on the cheque or demand draft (DD).
Put the girl child's name (the depositor) together with her birthdate.
Put the guardian's name, birthdate, Aadhaar number, and PAN number here.
Put the address and phone number in here.
Mention the account type and specifics of the depositor's birth certificate.
Enter the information from the linked KYC documents.
Place the name and signature together.
Enter the specifics of the nomination.
If the applicant is illiterate, signatures of two witnesses have to be included.
Documents for Sukanya Samriddhi Yojana
The following documents must be submitted to open an SSY account:
The girl child's birth certificate
Evidence of the guardian's identity and address
A medical certificate attesting to the multiple female children in one birth order
Additional KYC documents, such as voter IDs and Aadhaar cards, etc.
Any additional paperwork that banks or the post office require
Online Payment for Sukanya Samriddhi Yojana
To make online payments towards your SSY account, you must download the IPPB app to your smartphone. You can use this app to set up standing orders, which direct an online transfer of a predetermined amount to your SSY account. This is the detailed process:
Fund the IPPB account with funds from your bank account.
Open the DOP Products / Services tab on the IPPB app and choose the Sukanya Samriddhi Yojana account.
Input the customer ID and your SSY account number.
Decide how much and how long you want to pay in installments.
Once the payment routine has been successfully set up, IPPB will contact you.
Withdrawal Rules for Sukanya Samriddhi Yojana
The SSY account passbook and the properly completed withdrawal form (Form-3) must be turned in to the bank or Post Office branch where the account is kept. To file a claim or to take an early withdrawal, a number of conditions must be satisfied. For example, the girl child's post-18 education expenditures or marriage-related expenses must be covered. The girl may also take out up to 50% of the account balance at the end of the previous fiscal year to pay for school expenses such as fees or other similar charges if she is over 18 or has finished the tenth grade. An official offer of admission from an educational institution or a fee slip, as evidence of documentation, must be sent with the withdrawal application. The withdrawal amount, nonetheless, cannot be greater than the costs associated with being admitted to a university.
Closure of Sukanya Samriddhi Yojana
Closure on Maturity: After a girl child reaches the age of 21, her account matures, and she receives the remaining funds in the SSY—including interest—by filing an application together with documentation proving her identification, residency, and citizenship.
Premature Closure: Early closure is only permitted under the following circumstances:
Reasons for planned marriage: Once a girl child reaches the age of 18, she can file an application (Form-4) together with the necessary age verification documentation between one month before and three months after marriage.
In the event of the female child's death, the guardian will get the remaining funds in the SSY plus interest upon presentation of the death certificate.
Medical care in the event that the girl child has a life-threatening illness or if the guardian passes away.
Deemed closure in the event that a girl child's status changes, meaning she either stops living in India or loses her citizenship. The girl child or her guardian must notify the other party of the status change within a month of the change.
The girl child or guardian may request an early closure of the SSY after five years have passed if the post office or bank is convinced that the operation or continuation of the SSY is causing the girl child undue hardship (due to the guardian's death or the girl child's medical conditions, for example).
If the SSY is closed for any other reason at any point after this account is opened, it will be allowed, but the whole deposit will only be eligible for interest at the post office savings bank rate.
Steps to Transfer a Sukanya Samriddhi Account from the Post Office to a Bank
To move the SSY account from a post office to a bank, adhere to these guidelines:
Go to the PO branch that manages the account. The guardian can finish the process, so the girl child does not need to go to the PO branch.
Let the PO executive know that you want to move the SSY account.
Send in the completed KYC documents and the account transfer form. Upon your request, the executive will transfer the account after checking the details.
Go to the bank branch where you want to keep your SSY account open now.
When requesting to keep the account open with the PO executive, turn in the self-attested KYC documents together with any other documentation they may have provided.
The bank executive will process your request and give you with a new passbook.
Anywhere in India, post offices, banks, and post offices and banks can all transfer money to and from the balance in the SSY at no cost. This can be accomplished by providing documentation of the guardian's or the girl child's move. If there are any other circumstances, a fee of Rs 100 might be paid to make such a transfer.
What are the drawbacks of Sukanya Samriddhi Yojana?
The very long tenure of 21 years – higher than even PPF (15 years)
Very high lock-in period (till the child attains 18 years of age)
You can only open the account till your daughter reaches 10 years of age. Once your daughter completes 10 years of age, you cannot open the account for her.
The restriction on the daughter’s age (min. 18 years) and the amount (max. 50% of corpus) on withdrawal of money for higher education purposes is a dampener
You don’t have the flexibility to use the money for any other purpose other than girls’ education.
Withdrawal for higher education is restricted to the actual fee paid. This does not consider other out-of-pocket expenses, which constitute a big chunk of the total education expense.
The return from this scheme does not beat the prevailing education inflation in India, which is > 12% in some cases.
Should you invest in Sukanya Samriddhi Yojana?
On the face of it, Sukanya Samriddhi Yojana is a good scheme as it gives decent risk-free and tax-free returns.
However, its main drawback is the rigid withdrawal rules in the scheme. Empowering a daughter through proper education is much more important than marriage. In the present scenario, the money requirements for education arise much before a child completes 18 years of age.
This can be a good scheme for you if you are an utterly risk-averse investor and don’t want to take a risk with your money. Take care to invest the right amount every year to accumulate the desired corpus. Do also check out PPF, as it can prove a much better option from a liquidity point of view.
However, you may be an investor who understands the long-term benefit of investing in equity and can digest the volatility that comes with investing in this asset class. In that case, you can consider investing in a mix of equity and fixed income in a pre-set allocation as follows:
Equity portion: You can invest via direct equity or equity mutual funds.
Fixed Income portion: You can invest via a combination of debt mutual funds/ fixed deposits and the Sukanya Samriddhi scheme.
This will help in the following ways:
Equity will help in earning a much better return than fixed income options and help offset the impact of education inflation. Investment in ELSS scheme(s) can help you get a tax deduction u/s 80C.
By investing in Sukanya Samriddhi Yojana, you get two benefits. First, the tax advantage on your investment under Section 80C. Second, the income from your investment is completely tax-free and without any risk.
Debt mutual funds or fixed deposits can help you build a liquid portfolio. This portfolio can help you meet the money requirements that arise during the lock-in period of Sukanya Samriddhi Yojana.
Conclusion
Sukanya Samriddhi Yojana is a decent option to consider for dedicatedly planning your girl child’s education. However, it can work better if combined with other options like equity and debt mutual funds. Do take care of the rules on withdrawal from this scheme and keep some surplus funds to meet the money requirements as they arise.
FAQs
Q1. Is the maturity amount on SSY withdrawal taxable?
No, the SSY account's maturity amount is not subject to taxes; in fact, it is exempt.
Q2. What is the maximum deduction for SSY account deposits?
Section 80C allows you to deduct as much as Rs. 1.5 lakh from your taxable income for money deposited into an SSY account.
Q3. How can I apply for Sukanya Samriddhi Yojana online?
You are not currently able to apply for or create an online account for the Sukanya Samriddhi Yojana.
Q4. How can I check Sukanya Samriddhi Yojana account balance?
Upon opening an SSY account with a bank or post office, a passbook will be provided. For up-to-date information on the account balance shown on the passbook, you can visit the bank or PO branch where the account is maintained.
Q5. How many accounts can one open in Sukanya Samriddhi Yojana?
Every girl child may open only one account, at any bank or post office. A household may open one account for a maximum of two female children. A family may open more than two accounts only in the event that they give birth to twins or triplet daughters.
Q6. What is the minimum amount open an SSY account?
The SSY plan requires a minimum deposit of Rs. 250 in order to register an account.
Q7. What is the duration of the SSY account?
For SSY accounts, the minimum maturity time is 21 years, while the payment period is 15 years.
Q8. How much should I invest in SSY?
Any amount between Rs. 250 and Rs. 1.5 lakh can be invested in the SSY account each financial year.
Q9. How much amount will I get in SSY?
Your annual contributions determine the maturity amount of an SSY account. Additionally, you may take early withdrawals of 50% of the investment amount for school or marriage-related expenses as soon as the girl child turns 18.
Q10. How frequently can I invest under the Sukanya Samriddhi Yojana?
One time every fiscal year or in smaller, more frequent installments, you may fund an SSY account. To maintain the account open and operational, you must, however, pay a minimum of Rs. 250 every financial year and adhere to this requirement for a minimum of 15 years. If you decide to make deposits over time, you are free to choose any convenient period between installments. You are not limited in how many deposits you can make in a given month or fiscal year.
Q11. Is there any tax benefit of depositing in SSY Account?
Yes, the tax advantages are as follows:
The amount invested is deductable under Section 80C.
Taxes do not apply to interest generated on the amount deposited.
Received maturity funds are likewise exempt from taxes.
Q12. Who is the Guardian in Sukanya Samriddhi Scheme?
A Guardian in relation to a Minor can be:
Either parent.
A person authorised by present law to look after a minor's or an insane person's property in situations when neither parent is alive or the surviving parent is unable to act as such.
A court-appointed Legal Guardian.
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