Thank God for the Sukanya Samriddhi Yojana! In our view, it’s yet another reason (beyond the trillion others) to be proud and happy to have a girl child! 🙂 While there is so much one can write about the many ways daughters bring joy and pride to the family, here we’ll stick to just talking about the Sukanya Samriddhi Yojana launched by the Govt of India.
Sukanya Samriddhi Yojana Account – Benefits
Scheme Basics
The Sukanya Samriddhi Yojana is a tax-friendly investment scheme launched by the Govt of India to help parents secure the financial future of their girl child. This comes under the ambit of the Beti Bachao, Beti Padhao welfare scheme of the Govt.
Who is eligible
Any Indian citizen who has a daughter (or any legal guardian of an Indian girl child) who has not completed 10 years of age (on the date of application) is eligible for the scheme. Both child (Account Holder) and investor (Depositor) need to be of Indian nationality. NRIs, PIOs and OCIs are not eligible for this scheme.
What should be the right way to use the fund
The purpose for creation of this scheme is for the girl child’s long term financial needs. We are aware that expenses for higher education and marriage are very high today and are rising at a rapid pace. After 15-20 years, it is likely to be 8-10 times the current prices. It is difficult to ensure that these needs are met, unless they are carefully planned for. The Sukanya Samriddhi Yojana (SSY) account is a wonderful option available to all Indian citizens to do just that.
How much can you invest
- First Deposit (paid along with account opening): Minimum Rs. 1,000
- Further Deposits : Minimum Rs. 100 or multiples of Rs. 100
- Total Deposits Allowed : Maximum Rs. 150,000 in a year.
- Minimum Deposits every year : Minimum Rs. 1000 should be invested into the SSY Account every year. Else Rs. 50 will be deducted (as penalty) for every year that you have not paid.
How long can you invest
For up to 14 years from the date of opening the account. After that you cannot deposit further, but the entire fund will continue to earn interest at applicable yearly rates.
In what form can you make the investment
Cash, cheque or demand draft. Some banks may allow electronic transfer if you have a savings bank account in the same bank.
When do you get the returns
- Anytime after the age 18, you have the option to withdraw up to 50% of the accumulated value (at the end of the preceding year) for education or 100% of the accumulated value of the fund if you are planning your daughter’s marriage. You need to give an affidavit for that.
- In any case, the SSY account matures 21 years after the account is opened.
- The SSY Account may be closed at any time after 18 years if the girl is already married.
- Extreme circumstances – the SSY Account can still prematurely on compassionate grounds such as medical support in lifeÂ-threatening diseases, death, etc. on submission of adequate evidence.
Interest on Investment
Like PPF, interest rates on SSY will be declared by the Govt of India every year. At the time of launch, the interest rate was set at 9.1% compounded yearly. Here is the summary Sukanya Samriddhi Yojana Interest Rates till the time this article was written.
|
Financial Year (effective from April 1 of each year) |
Annual Rate of Interest for the Sukanya Samriddhi Yojana declared by the Govt. of India (compounded yearly) |
| 2014 – 2015 | 9.10% |
| 2015 – 2016 | 9.20% |
| 2016 – 2017 | 8.60% |
Tax Benefits
The Sukanya Samriddhi Yojana gets the E-E-E (Exempt-Exempt-Exempt) benefit.
- All investments into the Sukanya Samriddhi Yojana Account are subject to tax rebate under Section 80C of the Income Tax Act, 1961.
- All interest earned as well as all proceeds on maturity and any other partial withdrawals made are tax free.
When should you ideally start the scheme
Right now! The earlier you start, the more you will be able to accumulate by the time your daughter turns 18 and needs the money for education, marriage, etc. Ideally, start investing the day your daughter is born!
What is the highest fund size you can create
Here are some examples of how much you can end up with by the end of the period (rounded off to the nearest decimal)
| Amount invested for 14 years | Value of Invested Amount after 21 years (shown in Rs. lakhs) |
||||
| @ 7% per annum average | @ 7.5% per annum average | @ 8% per annum average | @ 8.5% per annum average | @ 9% per annum average | |
| Rs. 500 per month Rs. 6,000 per year |
2.3 | 2.5 | 2.7 | 2.9 | 3.1 |
| Rs. 1,000 per month Rs. 12,000 per year |
4.6 | 5.0 | 5.4 | 5.8 | 6.2 |
| Rs. 2,500 per month Rs. 30,000 per year |
11.6 | 12.5 | 13.4 | 14.5 | 15.6 |
| Rs. 5,000 per month Rs. 60,000 per year |
23.2 | 25.0 | 26.9 | 28.9 | 31.1 |
| Rs. 7,500 per month Rs. 90,000 per year |
34.9 | 37.5 | 40.3 | 43.4 | 46.7 |
| Rs. 10,000 per month Rs. 1,20,000 per year |
46.5 | 50.0 | 53.8 | 57.9 | 62.2 |
| Rs. 12,500 per month Rs. 1,50,000 per year (maximum allowed) |
58.1 | 62.5 | 67.2 | 72.3 | 77.8 |
Where can you buy it from
Any Post Office, Public Sector Bank, or select Private Sector banks such as ICICI Bank and Axis Bank. The Post Office has an unparalleled reach for the SSY Scheme with its presence in the most rural of areas.
Plan Flexibilities
- There is no limit to the no. of deposits made in a month or in a year.
- Your SSY Account can be transferred anywhere in India
- The girl can operate the account after she turns 10.
- If the account is not closed on maturity, it will continue to earn interest as declared each year.
Plan Restrictions
- Only 1 account can be opened per child
- One can invest in the SSY Account for up to 2 children only unless the outcome of the second birth is twins or triplets.
Opening a Sukanya Samriddhi Yojana Account
Following are the documents / item you would need to start a SSY Account for your daughter.
- Fill up and submit the Sukanya Samriddhi Yojana Account Application form.
- Date of Birth Certificate of the child who will be the Account Holder
- Address proof of the Depositor (parent or legal guardian) : Passport, Driving License, Electricity or Telephone Bill, Election ID Card, Ration Card or any other address proof issued by the Government of India.
- Identity proof of the Depositor : Passport, PAN Card, Matriculation Certificate, Election ID Card or any other certificate issued by Government of India.
It’s time for action
Whether to invest into the SSY Account is not a question, really. Don’t even try comparing this with similar other investment options like PPF, FD, etc. Even if you do, you will be surprised how much more the Sukanya Samriddhi Yojana delivers. When your daughter grows up, she will probably thank you for doing this, than for getting her all those toys and chocolates.
Calling the Sukanya Samriddhi Yojana account a positive social revolution would not be an overstatement. It not just ensures savings but also delivers a major social change for India – giving the girl child a special place which is long due. As of October 2015, 76,19,668 girl children have already got Rs. 2,839 crores deposited for their future. That is hugely inspiring!
We’ve got people across sections of society – from labourers, rickshaw pullers, salaried employees, white collar executives and managers and even CEOs, all rushing to the nearest Post Office or PSU bank branches to open the scheme. If you haven’t opened a Sukanya Samriddhi Yojana account for your daughter yet, make sure you do it this Saturday itself (or earlier if you can) and fulfill your responsibility towards your little angel! 🙂 Also, spread the word to your office-helps and house-helps, your driver, employees, etc. of the Sukanya Samriddhi Yojana account scheme and if you can manage the time, do help them open an SSY Account as well. You are sure to experience great joy.
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Thank you, Sir!!!
Dear Harjot,
Clearly there is a lot more that can be done on the service front.
To the best of our knowledge, the Post Office does not allow online deposits. Over time, they will perhaps start the facility. We would advise you that if possible, you could try and pay right at the beginning of every year in one shot so that you get the maximum value for your fund. It will also reduce the probability of a poor service experience.
Yet another option is to transfer it to where you feel the service levels could be better.
Hope this helps. Congratulations for joining the Sukanya Samriddhi Yojana Scheme and protecting the future of your daughter. God bless.
Good article and a great scheme. I started depositing in 2015 March itself so have paid 2 times already. I did not get good service from post office. After depositing the cheque, I had to go 3 times to get the passbook completed as they do not have proper systems in place. It was not a good experience at all. Is there any way that I can deposit the money online in case of account opened in post office and get a receipt of the same online itself?
That’s the feedback in general, Jagtap. Govt schemes are now getting so aggressively communicated and implemented that it is making the impact that was intended in the first place.
On the SSY Account, even the remotest of Post Offices is well informed on these schemes. No wonder more than 76 lakh girl children in the country have already benefited. We see this as a beginning and there is a long way to go.
Thanks for your spontaneous response, Jagtap.
I agree completely. I really love your writing style. A good investment scheme has been explained with total emotion rather than run-of-the-mill technical detailing method. Absolute fan of your posts. Great work, MintWise.
I want to tell you that when I went to the Post Office asking for the scheme, it was really impressive response. They knew everything and their help was really made me happy. Great scheme and good that all the post office people know about it so nicely.