CA Sandeep Kanoi

CA Sandeep KanoiPrime Minister Narendra Modi has Launched Sukanya Samridhi Yojna‘ (girl child prosperity scheme) with the vision to provide for Girl Child Education and Her Marriage Expense. Sukanya Samriddhi Account Scheme is a small deposit scheme for girl child, as part of ‘Beti Bachao Beti Padhao’ campaign, which would fetch yearly interest rate of 8.60% (WEF 01.04.2016) and provide income tax deduction Under section 80C of the Income Tax Act,1961.

In this article we have discussed Provisions of this Scheme alongwith tax and other benefits :-

Date of Commencement of Scheme- Sukanya Samriddhi Account Scheme is been notified by Ministry of Finance vide Notification No. G.S.R.863(E) Dated 02.12.2014. Shceme become operational by notification of rules namely Sukanya Samriddhi Account Rules, 2014’. These Rules were subsequently amended vide Notification No.G.S.R.323(E) dated-18.03.2016 by which government has notified Sukanya Samriddhi Account Rules, 2016’. The Article Analyses these Rules for easy understanding of our readers.

SSA TAXGURUDepositor– For this scheme Depositor is an individual who on behalf of a minor girl child of whom he or she is the guardian and deposits amount in account opened under this scheme. Under the revised rules definition of depositors also include Account Holder.

Who can be ‘Guardian’ under this Scheme – In relation to a minor girl Child Guardian means

(i) either father or mother; and

(ii) where neither parent is alive or is incapable of acting, a person entitled under the law for the time being in force to have the care of the property of the minor.

(iii) Under the Revised Rules Guardian Includes Legal Guardian too, Which means Parents of adopted Child adopted are also Guardian under the revised rules.

One Girl One Account Depositor cannot open multiple or more than one account in the name of a Girl Child. Rules been changed to specify that more than once account cannot be opened for a Girl Child even if depositor are different.

Can be opened for Maximum two girlsNatural or legal guardian of a girl child allowed to open one account each for two girl children’s subject to below conditions.

Account opening for more than two girls – Under this scheme natural or legal guardian of the girl child shall be allowed to open more than two Accounts for girl children’s in a family if such children are born in the first and/or in the second order of birth, on production of a certificate to this effect from the competent medical authority regarding the birth of such multiple girl children in the first two orders of birth in a family. But account under the scheme not allowed to be opened for girl child born in second or successive birth if first order of birth itself in a particular family results in two or more surviving girl children.

Age Restriction for Opening of Account- The account may be opened by the natural or legal guardian in the name of a girl child from the birth of the girl child till she attains the age of ten years and 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 is been commenced from 02.12.2014.

Grace Period for Opening of Account Account can be opened up to age of 10 years only from the date of birth. For initial operations of Scheme, one year grace has been given. With the grace, Girl child who is born between 2.12.2003 & 1.12.2004 can open account up to 1.12.2015.

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Documents to Open the Account and how to open the account- Birth certificate of a girl child in whose name the account is opened shall be submitted by the guardian at the time of opening of the account in post office or bank along with other documents relating to identity and residence proof of the depositor.

List of Banks Authorized to Open account under Sukanya Samriddhi Yojana

1. State Bank of India 2. State Bank of Patiala 3. State Bank of Bikaner & Jaipur 4. State Bank of Travancore 5. State Bank of Hyderabad 6. State Bank of Mysore 7. Andhra Bank 8. Allahabad Bank 9. Bank of Baroda 10. Bank of India 11. Punjab & Sind Bank 12. Bank of Maharashtra 13. Canara Bank 14. Central Bank of India 15. Corporation Bank 16. Dena Bank 17. Indian Bank 18. Indian Overseas Bank 19. Punjab National Bank 20. Syndicate Bank 21. UCO Bank 22. Oriental Bank of Commerce 23. Union Bank of India 24. United Bank of India 25. Vijaya Bank 26. Axis Bank Ltd. 27. ICICI Bank Ltd. 28. IDBI Bank Ltd.

Document required for opening Sukanya Samriddhi account are:-

  • Birth documents of girl child (Birth certificate)
  • Address proof of the Guardian
  • Identity proof of the Guardian
  • 3 Photos of of the Guardians and 3 photos of the child
  • Pan card and Aaadhar card copies of of the Guardians

No Fixed Interest Rate- Under this scheme Interest rate is not fixed and Government will declare on yearly basis the Interest on accounts opened under these rules. For the Financial Year 2014-15 Govt. has declared Interest Rate of 9.10% vide Notification F.NO. 2/3/2014.NS-II, DATED 20-1-2015. For Financial Year 2015-16 Govt. notifies Interest Rate of 9.20 % by Office Memorandum (OM) No.6/01/2011-NS.II dated March 31, 2015. For FY 2016-17 govt. has notified interest Rate of 8.60% per Annum.

Interest Rate & Scheme Change Table

S. No.Financial YearDate RangeInterest RateMinimum InvestmentMaximum Investment
12014-1501/04/2014 to 31/03/20159.1 %₹ 1,000/-₹ 1,50,000/-
22015-1601/04/2015 to 31/03/20169.2 %₹ 1,000/-₹ 1,50,000/-
32016-1701/04/2016 to 31/03/20178.6%₹ 1,000/-₹ 1,50,000/-

Interest After Maturity of account Earlier post maturity also if account holder do not close the account he was eligible for interest till final closure of the account but now No interest shall be payable once the Account completes twenty-one years from the date of its opening.

No Interest on Deposit made on or after 10th day of Month

The interest shall be calculated for the calendar month on the lowest balance in an Account on the deposits made between the close of the tenth day and the end of the month. So Account holder will not get any interest on amount deposited after 10th of the Month for the Month of Deposit.

Option of Monthly Interest

Revised scheme do not gives option of Monthly Interest.

Interest Compounding Monthly/ Yearly

Interest will be compounded yearly and will be credited to account till the account completes twenty one years from the date of opening. The interest shall be calculated for the calendar month on the lowest balance in an Account on the deposits made between the close of the tenth day and the end of the month.

Interest on Contribution in Excess of Rs. 1.50 Lakh Per Annum and withdrawal of excess payment

Deposit in excess of one lakh fifty thousand rupees in any financial year shall, if accepted due to any accounting error, not be eligible for any interest and such amount, which is deposited in excess of an annual ceiling of one lakh fifty thousand rupees, may be withdrawn anytime by the depositor.

Where one can open account? At any post office in India doing savings bank work and Branch of a commercial bank authorised by the Central Government to open an account under Sukanya Samriddhi Account Scheme.

Maximum and Minimum Deposit- The account may be opened with an initial deposit of one thousand rupees and thereafter any amount in multiple of one hundred rupees may be deposited subject to the condition that a minimum of one thousand rupees shall be deposited in a financial year but the total money deposited in an account on a single occasion or on multiple occasions shall not exceed one lakh fifty thousand rupees in a financial year.

Minimum – Rs, 1000/- Per Year

Maximum- Rs. 1,50,000/- Per Year

Term Period – Deposits can be made till completion of Fifteen Years (Earlier it was fourteen years) from the date of opening of the account. The maturity of the account is 21 years from the date of opening of account. In other words No Deposit for the period from 16th to 21st Year of account.

Regularisation of irregular account and Penalty Where minimum amount of Rs. 1000/- a year has not been deposited than such irregular account may be regularised on payment of a penalty of fifty rupees per year along with the minimum subscription of Rs. 1000/- for the year (s) of default any time till the account completes fourteen years.

Interest on Account in Default

If in the case of any Account, the default is not regularised within fifteen years of the opening of the Account, then the whole deposit, including the deposits made prior to the date of default, shall be eligible only for interest rate prescribed for Post Office Savings Bank at the time of its maturity and any amount credited wrongly by way of interest into an Account under default shall be reverted to the Government account as soon as it comes to the notice of the Bank or the post office concerned. ut if the default occurred because of the death of the guardian of the Account holder who opened the account than account holder will get interest as applicable to Sukanya Samriddhi account.

Interest on Change in Status of Account holder to non-citizen or non-resident of India

In the event of change of status of the Account holder’s citizenship or residential status, no interest shall be deemed to accrue to the Account from the change of such status and the Account shall be deemed to be closed prematurely from that date. In case, any interest was credited to the Account after the change of resident status or citizenship of the Account holder, be reverted to the Government account by the post office or the Bank concerned, immediately on being informed of such change in the status of the Account holder.

Mode of Deposit – Deposit can be made in any of the following mode :-

a. cash

b. by cheque or demand draft drawn in favour of the postmaster of the post office concerned or the Manager of the Bank concerned where the Account is opened, with an endorsement on the back of such instrument made and signed by the depositor indicating the name of the Account holder and Account number in which the deposit is to be credited;

c.through electronic means (e-transfer) in the concerned post office or Bank if such post office or bank has access to the facility of CBS.

Date of Credit of Deposit Made

(a) where the deposit is made by cheque, the date of encashment of the cheque;

(b) where the deposit is made by demand draft, the date of submission of the same to the Bank or post office; and

(c) where the deposit is made by e-transfer, the date of deposit.

Who can Operation the account and can the girl child operate the account?

(1) The Account shall be operated by the guardian till the beneficiary Account holder attains the age of ten years or till the beneficiary Account holder attains the age of eighteen years.

(2) The Account shall be operated by the beneficiary Account holder after such Account holder attains the age of eighteen years: Provided that the Account may be operated by the beneficiary Account holder after such Account holder attains the age of ten years.

Premature closure of account –

Though the duration of the Sukanya Samriddhi account is 21 years from the date of the opening of the account but request for premature closure can be made after 5 years from the date of opening of account in following scenarios :-

1. Untimely death of the account holder – In the unfortunate event of death of the beneficiary account holder (girl child), the account shall be closed immediately on production of death certificate issued by the competent authority. In that case the balance at the credit of the account shall be paid along with the accrued interest till the date of death shall be paid to the guardian.

2. Account holder become a non-citizen or NRI- If, after the opening of an Account, the Account holder becomes a non-citizen or non-resident of India, intimation to this effect shall be given by the guardian or the Account holder to the post office or the Bank concerned, as the case may be, within a period of one month from the date of such status of the Account holder’s citizenship or resident status. No interest shall be deemed to accrue to the Account from the change of such status and the Account shall be deemed to be closed prematurely from that date and credit in the account will be returned to along with interest due, to the Account Holder.

3. Extreme compassionate grounds– Where the post office or the Bank concerned is satisfied, in cases of extreme compassionate grounds such as medical support in life-threatening diseases of the Account holder or death of the guardian, that the operation or continuation of the Account is causing undue hardship to the Account holder, it may, after complete documentation, by order and for reasons to be recorded in writing, allow premature closure of the Account.

4. For Other Reasons– Premature closure of an Account may be permitted, anytime after the opening of an Account, for any reason other than provided under this sub-rule, and in which case the whole deposit shall be eligible only for the interest rate prescribed for the Post Office Savings Bank.

Pass book

(1) On opening an Account, the guardian shall be given a pass book bearing the name, address and date of birth of the Account holder, date of opening of Account, Account number, name and address of the guardian, relationship with the Account holder and the amount deposited.

(2) A duplicate passbook may be subsequently issued in the event of loss, mutilation, etc., of the original passbook, on the written request of the guardian or the Account holder, on payment of a fee of fifty rupees and such fees shall be creditable to the Government account.

(3) The guardian or the Account holder shall have the option to maintain the Account records exclusively in electronic form, provided the post office or Bank concerned has access to the facility of CBS.

Transfer of account to other place

(1) The Account may be transferred anywhere in India and from or to post offices and from or to Banks and between post office and Bank, free of cost on furnishing of proof of shifting of residence of either the guardian or the Account holder and otherwise, on payment of a fees of one hundred rupees to the post office or the Bank to which the transfer is made.

(2) The process of transfer shall be effected electronically if the post office or the Bank concerned, has access to the facility of CBS.

Pre-Mature Withdrawal for Education

(1) Withdrawal of upto a maximum of fifty per cent of the balance in the Account at the end of the financial year preceding the year of application for withdrawal, shall be allowed for the purpose of higher education of the Account holder but such withdrawal shall not be allowed unless the Account holder attains the age of eighteen years or has passed tenth standard, whichever is earlier.

(2) The application for withdrawal shall be accompanied by a 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 clarifying such financial requirement.

(3) The withdrawal may be made as one lump sum or in instalments, not exceeding one per year, for a maximum of five years, subject to the limit specified in point (1) above.

(4) withdrawal shall be restricted to the actual demand 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.

Closure on maturity or before maturity due to Marriage of Account Holder and Payment of Interest and Principal on Maturity

(1) The Account shall mature on completion of a period of twenty-one years from the date of its opening but final closure of the Account may be permitted before completion of such period of twenty one years, if the account holder, on an application, makes a request for such premature closure for reasons of intended marriage of the Account holder and on furnishing of age proof confirming that the applicant will not be less than eighteen years of age on the date of marriage. No such premature closure shall be made before one month preceding the date of the marriage or after three months from the date of such marriage.

(2) On maturity, the balance including interest outstanding in the Account shall be payable to the Account holder, on an application by the Account holder for closure of the Account, and on furnishing documentary proof of her identity, residence and citizenship.

(3) No interest shall be payable once the Account completes twenty-one years from the date of its opening.

Tax Benefit The amount deposited towards Sukanya Samriddhi Account is deductible under section 80C of Income tax Act,1961 upto Rs.1.5 lakhs as notified by Notification No. 09/2015 dated 21.01.2015. Amount deposited in this account will be counted in overall limit of Rs. 1.50 Lakh under section 80C. Interest earned in this scheme as well as maturity amount is exempt from Income Tax wef F.Y. 2014-15. Also Read- Interest on & withdrawal from Sukanya Samriddhi Account exempt from Tax

Comparison with PPF in respect of Tax Benefit- Investment in Both PPF & Sukanya Samriddhi Account is eligible for deduction under section 80C of the Income Tax Act, 1961. Like PPF in Sukanya Samriddhi Account also Interest and Maturity amount is exempt from Tax.

Drawback of the Sukanya Samriddhi Account Scheme-

  1. High Lock in Period
  2. Limitation on No. of Account
  3. Scheme do not provide for online transfer of Amount in this account. It allows only payment by Cash, Cheque and Demand Draft.
  4. No Clarity on Future Interest Rate for this account.

Benefits of Sukanya Samriddhi Account Scheme-

1. Higher Interest Rate

2. Tax Benefit Under Section 80C

3. Payment on Maturity to Girl Child.

4. Flexibility in Deposits- Any Number of time amount can be deposits in Multiple of Rs. 100 subject to Maximum Limit of Rs. 1.50 Lakh per year.

5. Transferable Anywhere in India.

6. Even Girl Child can operate after she attains the Age of 10 Year.

Conclusion It’s a good scheme started with a good motto by the Government with a long term vision.

Also Check – RBI Notification for Specimen of Sukanya Samriddhi Account Passbook and account opening Form

Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net

(Republished with further updated on 19.04.2016)

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