Sukanya Samriddhi Yojana (SSY) Scheme – Interest Rate 2023 | Tax Benefits

The Sukanya Samriddhi Scheme (SSY) is a government-sponsored saving schemes for the girl child in India. It was launched in 2015 as part of the Beti Bachao Beti Padhao campaign to promote the welfare of girls. The SSY offers a high interest rate, tax benefits, and guaranteed returns, making it a popular investment option for parents. An SSY account can be opened at any authorised bank or post office in India.

Table of Contents-

1. What is Sukanya Samriddhi Yojana?
2. About Sukanya Samriddhi Yojana
3. Sukanya Samriddhi Yojana Age limit
4. Sukanya Samriddhi Yojana Minimum Deposit
5. Samriddhi Yojana Interest Rates 2023
6. Closure of account
7. Withdrawal from the account
8. Tax Treatment of Investment in Scheme
9. Benefits of Sukanya Samriddhi Yojana

1. What is Sukanya Samriddhi Yojana?

The Sukanya Samriddhi Scheme is designed to help parents save for their daughters’ future needs, including higher education and wedding expenses. This scheme was initially introduced through Notification No. GSR 863(E) on December 2, 2014. However, it was replaced by a new scheme outlined in Notification No. GSR 323(E) on March 18, 2016. Subsequently, the government introduced another scheme via Notification No. GSR 914(E) on December 12, 2019, which revoked the previous scheme from 2016.

• The minimum deposit allowed is ₹ 250, while the maximum deposit in a financial year is capped at ₹5 Lakh.
• An account can be initiated in the name of a girl child until she reaches the age of 10 years.
• Only one account can be established in the name of a girl child.
• Accounts can be opened in either post offices or authorised banks.
• Withdrawals are permitted to fund the account holder’s higher education expenses.
• The account can be prematurely closed if the girl child gets married after turning 18 years old.
• It is possible to transfer the account from one Post office/Bank to another anywhere in India.
• The account reaches maturity after 21 years from its opening date.
• Deposits qualify for a deduction under Section 80-C of the Income Tax Act.
• The interest earned in the account is exempt from Income Tax under Section 10 of the Income Tax Act.

2. About Sukanya Samriddhi Yojana

2.1. Sukanya Samriddhi Yojana Eligibility

The account under this scheme can be opened by one of the guardians in the name of a girl child. The word ‘guardian’ has not been defined under the new scheme. Para 2(2) provides that the words and the expressions not defined in the scheme shall have the meanings assigned to them in the Act and the General Rules.

Thus, the meaning of ‘guardian’ as defined in the Hindu Minority and Guardianship Act, 1956, can be used for this purpose. As per Section 4(b) of the said Act, ‘guardian’ means a person having the care of the person of a minor or his property or both his person and property, and includes:

(a) A natural guardian;

(b) A guardian appointed by the will of the minor’s father or mother;

(c) A guardian appointed or declared by a court; and

(d) A person empowered to act as such by or under any enactment relating to any court of wards.

As per Section 6 of the said Act, for an unmarried girl, the father, and after him, the mother is considered the natural guardian. However, in case of an illegitimate girl, the natural guardian shall be the mother, after her, the father. The father and mother do not include a stepfather or stepmother in this provision.

Thus, a grandparent cannot open an account for the granddaughter if her parents are still alive. However, if a grandparent is the legal guardian of a girl child, they can open an account for the girl child.

2.2. In whose name the account will be opened?

The account can be opened in the name of any girl child who has not attained the age of 10 years as of the account’s opening date. Only one account can be opened in the name of a beneficiary (girl child).

2.3. Operation of the account

The account shall be operated by the guardian till the account holder attains the age of 18 years. The account shall be operated by the account holder (The girl in whose name the account is opened) after reaching the age of 18 years by submitting the necessary documents.

2.4. Number of accounts

Account under this scheme can be opened for a maximum of two girl children in one family. And every account holder shall have only one account under this scheme. Here, family means a unit consisting of a person and his spouse (alive or deceased) and their children, adopted or otherwise.

However, in the following cases, the account can be opened concerning more than two girl children provided an affidavit supported by the birth certificate of all the girl children is submitted by the guardian:

a) The first order of birth resulted in triplets, and all the children are girls or

b) The second order of birth results in two girl children, and the first order is the birth of a girl child. However, this exception shall be applicable if the first order of birth results in two or more surviving girl children.

2.5. How to apply for Sukanya Samriddhi Yojana?

The application for the opening of the account shall be submitted in Form-1 along with the birth certificate of the girl child in whose name the account has to be opened. Any one of the following additional documents relating to the guardian shall also be submitted for identity and address proof:

(a) Passport

(b) Driving license

(c) Voter’s ID

(d) Job card issued by NREGA signed by the State Government officer

(e) the National Population Register issued a letter containing name and address details.

3. Sukanya Samriddhi Yojana Age limit

• Parents or guardians are eligible to establish an account in the name of a girl child under 10. Families can open accounts for a maximum of two girls, and in the event of twins or triplets, additional accounts can be created.
• The guardian is authorised to manage the account until the girl reaches the age of 18 years.
• The Sukanya Samriddhi Yojana account can be closed 21 years after its opening date or upon the girl’s marriage once she turns 18 years old.

4. Sukanya Samriddhi Yojana Minimum Deposit

(a) The account may be opened with an initial investment of Rs. 250 and multiples of Rs. 50 after that;

(b) The minimum total deposit to be made in the account during every financial year shall be Rs. 250 and

(c) The total amount deposited in an account shall not exceed Rs. 1,50,000 during a financial year. Suppose, due to any error, the deposit in the account exceeds Rs. 1,50,000. In that case, such excess amount shall be refunded to the depositor, and no interest will be awarded on such extra amount.

If the depositor fails to deposit the minimum amount in the account, such account shall be considered an account under default. However, such default can be regularised on payment of a penalty of Rs—50 for each year of default along with the minimum annual deposit concerning the defaulted years.

If the default is not regularised, the whole deposit, including the deposit made before default, shall be eligible for interest at the rate applicable to the scheme till the closure of the account. In the previous scheme, the interest on un-regularised deposits was calculated at the rate of interest prescribed for the Post office savings bank at maturity, which is always lower than the rates prescribed under this scheme.

5. Samriddhi Yojana Interest Rate 2023

The government announces the Sukanya Samriddhi Yojana interest rate every quarter. For the second quarter (July-September) of the fiscal year 2023-24, the interest rate has been fixed at 8% per annum.

Interest shall be calculated for the calendar month on the lowest balance available in the account between the close of the 5th and last days of the month.

The interest shall be credited to the account at the end of each financial year. Any amount of interest in a fraction of a rupee shall be rounded off to the nearest rupee, and for this purpose, an amount of 50 paise or more shall be treated as one rupee and any amount less than that shall be ignored. Interest shall be credited at the end of the financial year irrespective of the change of accounts office due to the transfer of the account during the financial year.

Sukanya Samriddhi Interest Rate: Historical

Applicable rate of interest in different periods

6. Closure of account

6.1. Tenure

The amount may be deposited in the account till completion of a period of 15 years from the account’s opening date. However, the account shall mature on completion of 21 years from its opening date.

6.2. Sukanya Samriddhi Yojana Maturity Period

The account shall be deemed to have been matured in any of the following cases, whichever is earlier, and can be closed by submitting Form 4:

(a) Completion of 21 years from the date of opening of the account; or

(b) The account holder is getting married and furnishes a declaration signed on non-judicial stamp paper attested by the notary supported with proof of age confirming that the applicant will not be under eighteen years on the date of marriage. No such closure shall be allowed before one month from the date of the intended marriage or after three months from the date of marriage.

6.3. Pre-maturity closure

The account opened under this scheme can be closed before its maturity by submitting Form 2 in any of the following circumstances:

(a) In the event of the account holder’s death, the account shall be closed immediately. The closure can be requested in Form 2 along with the death certificate as issued by the competent authority;

(b) Where the accounts office is satisfied that in case of extreme compassionate grounds such as medical support in life-threatening diseases of the account holder or death of the guardian, the operation is causing an undue hardship to the account holder. The closure shall be allowed after complete documentation of the grounds of closure. However, no premature closure shall be allowed before the completion of 5 years from the account’s opening date.

7. Withdrawal from the account

7.1. Without closure of account

The amount can be withdrawn from the account without closure by applying Form-3. Such withdrawal is allowed for the education of the account holder only if the following conditions are fulfilled:

(a) Withdrawal is requested after the account holder attains the age of 18 years or has passed the 10th standard, whichever is earlier;

(b) Withdrawal amount shall be lower than the following:

• • • 50% of the amount in the account at the end of the financial year preceding the year of application for withdrawal and
    • Actual requirement on account of fee and other charges required at the time of admission as shown in the offer of admission or the relevant fee slip issued by the educational institution.

(c) The application is accompanied by documentary proof in the form of a confirmed offer of admission of the account holder in an educational institution or a fee slip from such institution indicating such financial requirement.

The payment in such cases may be made in a lump sum or a maximum of five yearly instalments.

7.2. Sukanya Samriddhi Yojana Premature Withdrawal

On premature account closure in the circumstances specified above (i.e., death of the account holder or on medical grounds), the balance in the account till the date of the death or the closure date in any other case shall be repaid to the guardian.

Interest due or credited to the account till the date of death or closure of account, as the case may be, shall also be paid to the guardian. In case of the account holder’s death, interest for the period between the date of death and the date of closure of the account shall be paid at the rate applicable to the Post Office Savings Account for the balance held in the account.

7.3. On maturity of account

At the account’s maturity, the amount standing at the account’s credit and interest shall be paid to the account holder.

8. Tax Treatment of Investment in Scheme

Sukanya Samriddhi Scheme falls under the EEE (Exempt, Exempt, Exempt) tax category, which means an investor is not liable to pay tax at all three levels – investment, earning and withdrawal.

Sukanya Samriddhi Scheme investments are eligible for deduction under Section 80C of the Income-tax Act. Any amount withdrawn from the account is exempt from tax under Section 10(11A).

8.1 Sukanya Samriddhi Yojana Tax Benefit

To promote investments in SSY, the scheme offers specific tax advantages through the SSA (Sukanya Samriddhi Account):

Contributions made to the SSY scheme qualify for deductions under Section 80C, with a maximum limit of Rs 1.5 lakh.

• • The annually compounded interest earned on this account is also tax-exempt under Section 10 of the Income Tax Act.
  • Additionally, the funds received upon maturity or withdrawal are not subject to income tax.

9. Sukanya Samriddhi Yojana Benefits

• • Affordable Deposits: Maintaining an SSY account requires a minimum deposit of just Rs. 250 per fiscal year. You have the flexibility to deposit up to Rs. 1.5 lakh per fiscal year at your convenience. These payment options make it accessible to individuals from all walks of life. Even if you miss making a payment for a year, a penalty charge of Rs. 50 will be applied to the missed minimum payment of Rs. 250, but the account will remain active.
  • Coverage for Educational Expenses: You can withdraw 50% of the account balance as of the end of the previous financial year to cover your girlchild’s educational expenses. This can be availed by providing proof of admission.
  • Attractive Interest Rates: The interest rate offered for SSY accounts has consistently remained high compared to other government-backed schemes. Presently, the interest rate stands at 8% per annum.
  • Guaranteed Returns: Given that SSY is a government-backed scheme, returns are guaranteed upon maturity.
  • Easy Transfer Process: You can transfer your SSY account from a post office to a bank or vice versa, anywhere in India.