What Are Benefits Of Sukanya Samriddhi Scheme?

Posted by Arjit Chalmela on March 5th, 2020

The Sukanya Samriddhi Yojana is a beneficial small savings scheme that parents can open for a girl child. The SSY was introduced in 2015 by the Government of India as a part of its Beti Bachao Beti Padhao campaign with a motive of building a corpus for the girl child.

Under this scheme, a Sukanya samriddhi account is opened in the name of the girl child with contributions that can be made from a minimum of INR 250 a year to a maximum of INR 1.5 lakh a year. These contributions earn interest and through compounding, the capital grows for the girl child till the time of maturity.

This account provides a safe means of raising a corpus for the girl child.

These are the benefits:

1. Tax benefits:

In terms of tax benefits, the Sukanya Samriddhi Scheme is like Public Provident Fund. Any contribution made into this account gets a deduction under Section 80C of the Income Tax Act up to INR 1.5 lakh. The interest earned on this account is exempt from tax. It is not considered as income in the hands of the parents or the girl child. Once the account matures, any amount lying to the credit of the account can be withdrawn without any further tax implications on withdrawal. This makes the Sukanya Samriddhi Account an Exempt-Exempt-Exempt (EEE) investment.

2. High Interest rate:

At present, the Sukanya Samriddhi Account earns the highest rate of interest as compared to other investment options. The current rate of interest is 8.1% which is significantly higher than other instruments. The rate is revised by the Government every quarter and applies for that quarter. Interest is calculated on the deposits and is compounded annually.

3. Interest payment on maturity:

The account earns interest on the balance to the credit of the account. You can make deposits into this account for 15 years after the account is opened. It will mature after 21 years of account opening. However, till the time the account is closed, the balance to the credit of the account continues to earn interest.

4. All girl children:

The account can be opened for a biological girl child and for an adopted girl child. The scheme doesn’t distinguish between girl children like this. This scheme can be opened for two girl children and in case the second birth is a multiple birth with girl children then accounts can be opened for all those girl children.

5. Withdrawals:

The funds in a Sukanya Samriddhi Scheme can be withdrawn only after maturity. Premature withdrawals can be made to fund the girl child’s wedding expenses and for her education expenses. These premature withdrawals are restricted to 50 per cent of the total balance in the SSY account. Any sum withdrawn is payable only to the girl child. This can go a long way in improving the financial independence of a girl child.

6. Lock in and maturity:

Once opened, you can make contributions for 15 years from the time the account is opened. The account matures 21 years after it is opened. For the last seven years, no contributions need to be made, but the account continues to earn rate of interest.