Your baby girl deserves the best in opportunities and protection in this big wide world and you have probably looking for a child plan for her already. Apart from the plans offered by the private banks and insurance firms, you should also take a look at one that the government has to offer. Sukanya Samriddhi Account is a part of the present government’s “Beti Bachao – Beti Padhao” initiative and was launched on January 22, this year. It is a small savings scheme, which can be opened by the parents or the legal guardian of a girl child in any post office or authorized branches of select commercial banks. Take a look to understand this scheme in detail.
What is the Return on Sukanya Samriddhi Scheme?
The interest rate offered on this scheme was flagged off with 9.1%, and is further increased to 9.2% for the financial year 2015-16. This interest rate is not fixed and is subject to revision every financial year just like the PPF.
Who can open this account?
Parents or a legal guardian can open a Samriddhi account in the name of a girl child. From birth till the age of ten, any girl is eligible to have an account opened in her name. The government has also allowed a one-year grace period, thus making 11 years the eligible age.
How many accounts one can open?
Only one account can be opened per girl child to the maximum limit of two children, except in the case of twins or triplets, wherein this facility would be extended to the third child. This means that you can even open three accounts in case you are blessed with twin girls on the second occasion, or in case the first birth itself results in triplets.
What is Minimum & Maximum Investment amount I can make?
To keep your account active, you need to deposit a minimum of Rs. 1000 in a particular financial year. Failure to do so will make this account inactive. The same can be activated again by paying a penalty of Rs. 50 in addition to the minimum payable amount of Rs. 1000. The maximum amount, which can be invested in this is Rs. 1,50,000 in a year and there are no limits to the number of times you can make these contributions.
What is the duration of Sukanya Samriddhi Scheme?
The total duration of the scheme is 21 years and the money deposited will mature at the end of 21 years from the date of opening. One can even continue to earn interest every year if the account is not closed after completion of 21 years.
Do I need to make a contribution every year?
No, you have to make contribution to this scheme for the first 14 years only, although the scheme’s duration is for 21 years. Post that, you do not need to deposit further amounts, but your account will keep earning the interest rate applicable for the remaining 7 years.
Can I close it Prematurely?
Yes, this account can be closed prematurely when your daughter completes 18 years of age and provided she gets married before the withdrawal. Since the maximum permissible age is set for 10 years, the scheme by default carries a minimum duration of 8 years.
Can I make a Partial Withdrawal?
Yes, you can withdraw partially to the extent of 50% of the balance remaining at the end of the preceding financial year but only in a case when your daughter attains the age of 18 years. This makes sure that you have a lock-in period of at least 8 years and one cannot withdraw any money from the account before that.
Who will receive the Maturity proceeds?
On maturity of this account, the entire proceeds i.e. account balance along with the interest accrued on the account will be paid to the account holder i.e. girl child directly. It gives a good financial independence to the girl, which indeed is a good move.
Can I make online payments to this scheme?
No online payments can be done at the moment and deposit can be made only by cheque, cash or a demand draft.
Taxability of Sukanya Samriddhi Account
The best part of this scheme is that it offers complete tax-free treatment on interest income and as well as the maturity proceeds. It comes under EEE regime i.e. it is totally exempt at all the stages like on deposit, exempt on returns, exempt on maturity.
Tax benefit for investment made in Sukanya Samriddhi Account
Now the erstwhile popular section 80C also includes the investment made in Sukanya Samriddhi Account to the extent of maximum limit of Rs. 150000/- , all the contributions to the limit as mentioned will be eligible for tax saving u/s 80C apart from PPF/MF ELSS/Insurance premium/NSCs/PF etc.
Should you open Sukanya Samriddhi Account for your daughter?
On closely observing the scheme, you will find that it is very similar to one of the other most popular tax free tax saving investment option i.e. PPF (Public Provident Fund) which offers tax free returns of 8.7% and keeps changing every year as notified by the government. The other similarities are in terms of its lock-in, passbook facility, partial withdrawal and taxability; so the question, which needs to be asked is whether Sukanya Samriddhi scheme is better than PPF or any other means of fixed returns? If you look at the overall intention of the government, then I think it is a well-intended financial product, but it still cannot beat the PPF, except with slightly higher rate of returns.
But at any point of time, it is way better than all the traditional so called child insurance plans i.e. insurance policies which are prominently sold in under the guise of safeguarding your children’s future, instead it only safeguards the agents future. So in comparison to those wrongly bought child plans, Sukanya Samriddhi scheme is a good option to go with. After all having a girl child is bliss and why not secure our ghar ki Laxmi by investing for her better future. Beti bachao- Beti padao!
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