Sukanya Samriddhi Yojana: Check Investment Process, Eligibility and More

Planning for a child's future is the most significant responsibility of the parents. In the case of a girl child, parents often plan to create a financial safety net that will help them achieve all their future goals, including education and career expenses. To encourage the habit of savings, the Government of India launched the Sukanya Samriddhi Yojana (SSY) in January 2015.

Prime Minister Narendra Modi launched Sukanya Samriddhi Yojana as a part of his Beti Bachao, Beti Padhao campaign. The objective of this scheme is to motivate parents and guardians to save money for their daughters' financial future. Being a government-backed small savings scheme, SSY can be considered a relatively secure option for long-term savings.

The most significant feature of Sukanya Samriddhi Yojana is that it offers savings, tax benefits, and the potential benefits of compounding over the long term. The parents can start with a small amount and then make regular savings for many years. Over time, these savings can become a valuable fund for the girl child.

In this article, we will understand what Sukanya Samriddhi Yojana is, how it works, who can open an account, what documents are required, how to invest, and what rules apply to withdrawals and maturity.

What is the Sukanya Samriddhi Yojana?

Sukanya Samriddhi Yojana is a government-backed savings scheme designed to support the financial security of girl children. Under this scheme, any parent or guardian can open a bank account in the name of an eligible girl child. The scheme is not meant to be used as a regular savings account where one can deposit or withdraw money as and when required, as an SSY account is meant for long-term savings.

The scheme aims at encouraging people to keep their savings invested for a long period of time so that the money earns more value. SSY is helpful for future expenses like higher education, professional courses, career-related expenses, and even marriage expenses, if required, as per the applicable rules.

This scheme is administered under the government’s small savings schemes,, and SSY accounts can normally be opened through post offices and authorised banks. One of the important benefits of this scheme is that it helps individuals to save in an organised manner for the financial future benefit of the girl child. Since the account is opened in the name of the girl child, the savings are directly related to the girl's future needs.

Key Features of Sukanya Samriddhi Yojana

• Government-Backed Savings Scheme: The SSY scheme is backed by the Government of India. It provides an additional layer of assurance to investors who look forward to investing in government-backed schemes. Unlike market-linked investments, the returns from the scheme are not directly linked to stock market performance.
• Interest Rate: One of the reasons why parents consider the SSY scheme is its interest rate. The interest rate provided under the scheme has been fairly attractive compared with other savings schemes. However, it should be kept in mind that the interest rate is revised periodically by the government. So, one should check the applicable interest rate before taking any investment decision. The interest is credited into the account and helps the savings grow through compounding.
• Tax Benefits: Another benefit of Sukanya Samriddhi Yojana is the tax benefit available under the applicable tax laws. The deposit made under the scheme is eligible for deduction under Section 80C of the Income Tax Act, subject to the overall limit. The overall limit under Section 80C is ₹1.5 lakh in a financial year. The scheme is known as the EEE (Exempt-Exempt-Exempt) scheme, under which contributions, interest, and qualifying maturity amount receive tax benefits under applicable law.
• Long-Term Savings: The SSY scheme is meant for long-term financial planning. Parents can build a fund over time through the SSY scheme rather than arranging a large sum of money at the last minute. A long-term financial planning scheme can be helpful when the girl child requires financial support for higher education or other eligible future needs.
• Partial Withdrawal Facility: There is a provision for partial withdrawal from SSY accounts in certain circumstances. Partial withdrawal is allowed mainly for the higher education of the account holder. In general, the eligible amount can be withdrawn by the account holder once she reaches the required age. The withdrawal limit can be up to 50% of the eligible balance, as permitted under the scheme rules.
• Minimum & Maximum Investment: The minimum deposit limit was reduced from ₹1,000 to ₹250 in 2018. Parents can make a minimum deposit of ₹250 and a maximum of ₹1.5 lakh in a financial year. It is important to note that the deposits can be made for a period of up to 15 years from the account opening date.

Eligibility Criteria for Sukanya Samriddhi Yojana

The following conditions must be met to invest in the Sukanya Samriddhi Yojana:

• The girl child must be under 10 years of age at the time of account opening.
• Only one account can be opened in the name of each girl child d. A family can usually open an account in the names of two girl children.
• There are special provisions for cases involving twin or triplet girl children, as per the relevant guidelines and required proof.
• The account is opened in the name of the girl child by her parent or guardian. Once the girl attains the required age, she will be able to operate the account by herself as per the scheme.
• It is thus important that the account is opened within the eligible age limit. Parents who are interested in the scheme should not wait until their girl is almost 10 years of age.

What Documents are Required to Invest in SSY?

As per the government guideline, the following documents are required for investing in the Sukanya Samriddhi Yojana:

• Sukanya Samriddhi Account Opening Form
• Birth certificate of a girl child
• Identity proof (as per RBI KYC guidelines)
• Residence proof (as per RBI KYC guidelines)

How to Invest in Sukanya Samridhi Yojana?

Parents can follow the steps below to start investing in the Sukanya Samriddhi Yojana for their girl child:

Step 1: Choose a Post Office or Authorised Bank

The parents or legal guardians can visit a post office or an authorised bank to open a Sukanya Samriddhi account. It is helpful to confirm beforehand that the particular branch offers the scheme and knows what documents are required.

Step 2: Fill Out the Application Form

The parent or legal guardian has to fill out the application form for the Sukanya Samriddhi account. The form usually requires the following information:

• Name of the girl child
• Date of birth
• Information about the parent/guardian
• Address
• Identification and KYC information
• Other required information All details must be filled in accurately, as the account is related to the girl child's identity and date of birth.

Step 3: Submit the Required Documents

After completing the form, the parent or legal guardian has to submit all the necessary documents. The institution will verify the details and open the account once the verification is complete.

Step 4: Make the Initial Deposit

The account can be opened through the initial deposit. The deposits can be made through permitted means, such as cash, cheque, demand draft, or other modes of payment. The minimum annual contribution is ₹250, while the maximum contribution allowed per year is ₹1.5 lakh.

Step 5: Receive the Passbook

After opening the account, the account holder receives a passbook containing the account details. Parents should keep the passbook safe and update it whenever necessary so that they can track deposits and other transactions.

Sukanya Samriddhi Yojana Online Investment Process

As per the guidelines, you can not open an SSY account online. However, once the account is opened, you can manage it by setting up automatic payments.

Rules for Premature Withdrawal: Sukanya Samriddhi Yojana

The government has allowed premature withdrawal under the conditions mentioned below:

• Marriage: The Sukanya Samriddhi Yojana can be closed if the beneficiary is getting married after 18 years of age. The account holder or guardian must inform the authorities at least one month before or up to three months after the date of marriage.
• Education: Partial withdrawal is allowed if the beneficiary secures admission in any institution for higher education. For this, a valid admission proof has to be submitted at the time of withdrawal.
• Account Holder’s Death: If the account holder passes away, the account can be closed immediately by submitting an application and the official death certificate. The guardian or nominee will receive the account balance along with the interest calculated up to the date of death. Additional interest applicable to a Post Office Savings Account may also be paid until the account is formally closed.

Things to Keep in Mind Before Investing in SSY

• Long-Term Investment: SSY is a long-term savings scheme. Hence, it may not be appropriate for immediate or short-term expenditure needs.
• Interest Rate Can Change: The interest rate is determined by the government and may vary from time to time. Therefore, it would be best for investors not to assume that the current interest rate will remain the same through the investment tenure.
• Limited Withdrawal Facility: Premature withdrawal is allowed in SSY accounts under specified circumstances, such as higher education or other purposes mentioned in the guidelines.
• Keep Emergency Savings Separate: Considering the limited withdrawal facility available under SSY accounts, parents should maintain an emergency savings fund to cover unexpected medical, educational or personal expenses.
• Tax Rules May Change: Tax benefits offered by SSY are subject to the income-tax laws in force now. Parents should consider the prevailing tax benefits while deciding on investments.
• Start Early: Starting an SSY account early provides ample time to make regular deposits and benefit from compound interest.
• Invest According to Your Budget: Although the maximum annual contribution can be substantial, parents do not necessarily need to invest the maximum amount. They should choose a contribution level that fits comfortably within their annual budget.

FAQs

Who can open a Sukanya Samriddhi Yojana account?

Parents or legal guardians of a girl child below 10 years of age can open an SSY account in her name.

What is the minimum amount required to invest in SSY?

The minimum annual investment required is ₹250 to keep the account active.

What is the maximum investment allowed in a year?

You can invest up to ₹1.5 lakh per financial year in a Sukanya Samriddhi account.

Is the interest earned on SSY taxable?

No, the interest earned and maturity amount are completely tax-free under current tax rules.

Can I open an SSY account online?

Most banks require account opening at the branch initially, but future deposits can often be made online.

When can a partial withdrawal be made?

Up to 50% of the balance can be withdrawn after the girl child turns 18 for higher education expenses.

What happens if the minimum deposit is not made?

The account becomes inactive, but it can be revived later by paying the penalty and minimum deposit amount.

Can the SSY account be transferred to another city or bank?

Yes, the account can be transferred anywhere in India between authorised banks and post offices.