What is Sukanya Samriddhi Account?

As a part of Beti Bachao, Beti Padhao campaign, Sukanya Samriddhi Account scheme was launched by Prime Minister Narendra Modi on 22-Jan-2015. Sukanya Samriddhi Account is a Government of India initiative targeted at the parents of Girl Children and encourages the parents to build a fund for the future education and marriage expenses for their female child. It’s a savings deposit scheme for the girl child. Sukanya Samriddhi Account presents itself as an affordable scheme and offers one of the highest rates of interest.


What are the Salient Features of the Sukanya Samriddhi Account?

One girl child – One bank account

Sukanya Samriddhi Account can be opened in any post office or the authorized banks; this scheme shall work on concept of one girl child – one bank account i.e. only one account shall be opened for one girl child;

Maximum for two girl children

Parents can open this account for a maximum of two girl children.

For third child

Under the scheme natural or legal guardian of the girl child shall be allowed to open third account in the event of birth of twin girls as second birth or if the first birth itself results into three children, on the production of a certificate to this effect from the competent medical authority where the birth of such twin or triple girl children take place.

Account Operator

Account shall be operated by parents/ legal guardian till the girl child attains the age of 10. Thereafter she may operate her account, if she chooses to;

Transfer of account

Account is transferable to any part of the country in situation of account holder or depositor moving to other places;

Interest

Interest paid by government under the scheme is 8.4% for FY 2017-18 (AY 2018-19) & 8.1% for FY 2018-19 (AY 2019-20). However interest rate is not fixed and Government will declare on yearly basis the interest rate.

Interest Compounding

Interest shall compound on a monthly basis and would get credited to the account till the account gets matured or amount is withdrawn from the date of opening of account.

Maturity duration

Maturity Period of the account is 21 years. But if the girl wishes to continue the account further, maturity amount would grow at the same interest rates as per the scheme’s current rates.

Marriage before 21

If the girl is married anytime after the age of 18 years, the scheme offers closure of the account. In such case, affidavit and relevant proof would be required stating the marriage of such girl.

Withdrawal

No amount can be withdrawn from this account before the girl attains the age of 18 years. 50% amount can be withdrawn from the account after the girl turns 18 years for her higher education or marriage purpose.

Penalty

If in a financial year, the minimum amount has not been deposited, the account stands inactive. A fine of Rs 50 per year has to be deposited to re-active the account.

Loan facility

It is not available against Sukanya Samriddhi account,

What documents are required for opening Sukanya Samriddhi Account?

Very basic and only three documents are required for opening SSY account. These documents are, namely,

In short it is applicable to-
  • Birth Certificate of the Girl child
  • Proof of Address of parents/guardians
  • Proof of identity of the parents/guardian

Who can open account in Sukanya Samriddhi Scheme?

The eligibility criteria for opening an Sukanya Samriddhi Scheme :
  • Account Opening Age Sukanya Samriddhi Account can be opened in the name of girl child anytime after her birth but before she attains the age of 10. However any girl child who had attained the age of ten years, one year prior to the commencement of these rules shall also be eligible for opening of account under these rules. Scheme has commenced from 02.12.2014.
  • Minimum deposit period Minimum deposit period is 14 years; so, the amount can be withdrawn only if some amount is deposited in the account till 14 years.
  • Opening amount Opening amount to be deposited in account is Rs. 250. [Before 23 July 2018, this limit was Rs 1,000]. Thereafter a certain amount is to be deposited in regular intervals (monthly or yearly as suitable).
  • Minimum deposit The minimum amount to be deposited in the Sukanya Samriddhi Account is Rs. 250 at a single point in time. [Before 23 July 2018, this limit was Rs 1,000]. Maximum limit of deposition of such amount shall not exceed Rs. 1,50,000 at a single point in time.

What are the Tax benefits of the Scheme?

Together with providing financial security to a girl child’s future, the savings under sukanya samriddhi yojana also help guardian or parent to claim income tax benefits such as,

  • Amount deposited in scheme would be exempted from tax under section 80C of Income Tax Act 1961 (Maximum limit of 80C being Rs. 1,50,000).
  • Interest credited on deposited in such account will be exempt from tax.
  • Amount withdrawn from the account shall also be exempt from the income tax.

How Sukanya Samriddhi Yojana account is different from PPF?

S.No.Basis of differenceSukanya Samriddhi AccountPublic Provident Fund
1.Targeted ConsumersSSA has been implemented for welfare of girl childrenPPF has been implemented for welfare everybody
2.Minimum balance requiredRs. 250
[Before 23 July 2018, this limit was Rs 1,000]
Rs. 500
3.Maximum Amount which can be deposited every yearRs. 1,50,000 individually for every account opened by a personRs. 1,50,000 combined for all accounts opened by a person
4.Interest on savings for FY 17-18 & FY  18-198.4% & 8.1 %7.60% & 8.7%
5.Minimum Lock in period14 years15 years
6.Premature Withdrawal50% at the age of 18 of girl childAllowed for educational or financial needs up to 50%

Why invest in Sukanya Samriddhi Account?

The answer to your question is Investment plus safety for your girl child. As we know there are a lot of other plans of insurance that provide child plans too but they instead of safeguarding your child future, safeguard the agents future who is selling the policy.

But Sukanya Samriddhi Account is different, here all the amount you put in the account is an investment. Since girl child needs lump sum money at the time of her marriage or for education, it is important to start saving for those big ticket item in their early ages.

It is really a very good saving scheme because it offers highest interest rates as compared to other schemes. Moreover since backed by the government, it is secure.


Drawbacks Of Sukanya Samriddhi Yojana Account

Although SSY accounts are a great way of providing financial support to girl child, like every scheme it too has its drawbacks.

  • It does not have a fixed rate of income which could be confusing for many people. For the year 2014-15 the interest rate was 9.1%, for 2015-16 it was 9.2% while for the year 2016-17 its 8.1%.
  • SSY accounts do not allow premature withdrawal which could be a problem for many people as normally, when faced with financial troubles, people tend to turn to their savings.
  • Long maturity period: the maturity period for SSY account is on the higher side (21 years), and for those looking for a shorter investment option, it can be a problem.
  • One of the major drawbacks of SSY accounts does not allow online transfer and banking facilities in case you opened one at a post office.
  • Parents or legal guardian with more than two girls can not open an account for each one of them.

Sukanya Samriddhi Yojana Account Can Be Transferred To Another Bank

One can transfer their SSY accounts to any other place in India depending on their convenience. If one wishes to do the same, following are the steps:

  • First, they need to visit the post office or the bank where they have their account with their passbook or KYC document. The girl child may or may not be present at the time of the transfer, unless the girl is the one managing her SSY account.
  • Then, they have to let the post office executive know that they wish to transfer their SSY account to some other bank in the same or different city.
  • Then they need to return their passbook given to them by the post office at the time of opening the account.
  • After that’s done, their account at the post office or bank account will be closed by the concerned representative and they will receive the documents required to be submitted at the new bank.
  • Then, they will have to visit the new bank where they wish to open their account and submit the documents.
  • The bank may require their KYC documents as well.
  • The bank will then create an account for them and give them a new passbook with their personal details and carried forward account balance in it.
  • Finally, the bank will activate their account.

And thus the Sukanya Samriddhi account of the account holder will be transferred. It is a very simple and straight forward process which only requires the KYC documents and the passbook.


Few Pointers Regarding Withdrawal And Premature Closures To Be Kept In Mind Before Opening Your Sukanya Samriddhi Yojana Account

At The Time Of Opening:

The account can only be opened in the name of a girl child (beneficiary) as long as she is below the age of 10 at the time of opening the account. The date of birth is taken as a proof for the same.

Also, there could only be one account for each girl child. A guardian can only open two such accounts, while in case of twins they can have three SSY accounts.

5 Year Mark:

The request for the first premature closure of the Sukanya Samriddhi account could be made at the completion of the 5 year period after opening the account. But, it is only applicable in the case of extreme compassionate grounds, such as medical support.

10 Year Mark:

Once the girl is above the age of 10, she herself can operate her account. She, her parents or legal guardian are at full liberty to make further deposits in the SSY account.

15 Year Mark:

Once the 15 year mark is reached (to be counted from the day the account was set up) no further deposits will be accepted. However, if the account wasn’t made at the time of birth of the girl then the deposit period, though not increased, will be completed later. For example, if the girl is 9 year old at the time the account was opened, the deposit period will end when she turns 24.

18 Year Mark:

The next window for the withdrawals appears when the girl is 18 years old, but at that time only up to 50% of the total amount could be withdrawn. Also, the rules make it very clear that the money is not to be used for personal needs, rather it can only be withdrawn for the purposes of marriage or higher education.

21 Year Mark:

Irrespective of the age of the girl’s age, the Sukanya Samriddhi account will run for 21 years from the day of its opening. But, the rules however state that it is not necessary to close the account after 21 years. In fact, if the account is not closed after 21 years, the account will go on receiving interest until the final closure.


Sukanya Samriddhi Yojana – FAQs


How do one deposit funds in your Sukanya Samriddhi Yojana account?

You can deposit your cash or cheque directly at the bank or post office. Or, if you prefer, you could do fund transfer through the linked guardian’s account.

Follow this process to transfer fund from the linked guardian’s account:

  • Go to My account –
  • Then select Sukanya Samriddhi account –
  • Initiate self fund transfer –
  • Go to transfer funds –
  • Click on Add Payee.

How do you apply for Sukanya Samriddhi Yojana account?

To apply for an SSY scheme, one has to fill the Account opening form for their girl child and submit it at their nearest post office or bank that provides this facility.


Can Sukanya Samriddhi Yojana account be closed permanently before it matures?

Premature closure of a Sukanya Samriddhi account is not permitted.


Are loan facilities available in Sukanya Samriddhi Yojana account?

Loan facilities are not available in SSY accounts.


What is the maximum and minimum amount that can be deposited in the Sukanya Samriddhi Yojana account?

The minimum amount that can be deposited in the Sukanya Samriddhi account are Rs.250 [Before 23 July 2018 it was Rs 1,000]. Although the maximum amount that could be deposited is ?150000 but there is no limit on how much one can deposit each year or each month. Also, if the girl wishes to withdraw from her account she can withdraw up to 50% given that she is 18 years old or above.


What is the current interest rate of Sukanya Samriddhi Yojana account?

The current rate of SSY account is 8.1% which is compounded annually. The interest rate is governed by the Minister of Finance of the country.


How many Sukanya Samriddhi Yojana accounts can be opened by one guardian?

Only two accounts can be set up by a single guardian and only one account for one girl child. However there is a provision of opening three SSY account in case of twins or triplets.


Is there an option of withdrawing money before the account matures?

Yes, a partial amount can be withdrawn from the account after the girl child (benefactor) turns 18 for her marriage or higher studies. However, the partial amount being withdrawn cannot be more than 50% of the total amount.


When does a Sukanya Samriddhi Yojana account mature?

Sukanya Samriddhi Yojana accounts mature in 21 years from the date of account opening.


Can Sukanya Samriddhi Yojana account be opened online?

At present, neither the bank branches nor the post office provide the option of opening a SSY account online. But once the account is opened, one can set the standard instructions online. This could be done only after the submission of the required documents has taken place.

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CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.