Tax Benefits of Sukanya Samriddhi Yojana for Girl Child

Introduction: The birth of a girl child is celebrated as a blessing in a family, and in India, this blessing has transcended into an opportunity for tax savings. To reshape societal attitudes towards girl children and uplift their standing in society, various girl child schemes have been initiated across the country. One such impactful scheme is the Sukanya Samriddhi Yojana (SSY), which not only secures a little girl’s future but also offers substantial tax benefits.

Key Features of Sukanya Samriddhi Yojana:

1. Operation of the Account:

• The guardian or parents can operate the account until the girl reaches the age of 18.
• The girl must operate the account once she attains the age of 18.

2. Interest Rate: Currently set at 8.2% p.a. (from 01.01.2024 to 31.03.2024)- Read: Revised Small Savings Schemes Interest Rates for January-March, 2024

3. Deposit Amount p.a.:

• Minimum: Rs. 250
• Maximum: Rs. 1,50,000. Deposits can be made in multiples of 100.

4. Maturity Period: 21 years or until the girl is married after attaining the age of 18 years.

5. Eligibility:

• The parent or legal guardian can open an SSY account on behalf of a girl child until she reaches the age of 10.
• The girl child must be a resident Indian.
• Up to two accounts can be opened for two girls in a family.
• A third SSY account can be opened in case of twin girls.

3. Lock-in Period: 15 years

7. Documents required to open an SSY account:

• SSY account opening form.
• The birth certificate of the girl child must be submitted at the time of opening the account.
• The ID proof and address proof of the depositor must be submitted at the time of opening the account.
• A medical certificate has to be submitted in case multiple children are born under one order of birth.
• Any other documents that are requested by the bank or post office.

8. Transfer of Account:

• An SSY account can be transferred from post offices to banks and vice versa anywhere within India.
• No charges will be levied for the transfer of the account. However, proof of change in residence must be produced. In case no proof is produced, a Rs.100 charge will be levied.

Other Features:

1. Sukanya Samriddhi Yojana account can be opened in any post office or authorized branch of commercial banks.

2. SSY investments are designated as an EEE (Exempt, Exempt, Exempt) investment. This means that the principal invested, the interest earned as well as the maturity amount are tax-free. Under the existing taxation rules of Sukanya Samriddhi Yojana, the tax deduction benefit on the principal amount invested is up to Rs. 1.5 lakh per annum under Section 80C of the Income Tax Act, 1961.

3. Premature Closure:

• Allowed only in specific situations, such as intended marriage after the child attains the age of 18 years.
• An application can be submitted between one month before marriage and 3 months after marriage along with her age-proof documents.
• In the unfortunate event of the death of the girl child, the balance in the account will be paid to the guardian upon the production of the death certificate.

4. Withdrawal:

• Allowed for higher education if the girl child has either attained 18 years or completed the 10th standard of the school.
• For meeting the actual fee or other charges required at the time of admission.
• Withdrawal has a maximum cap of 50% of the balance in the SSA at the end of the preceding financial year.
• This can be made in either one lump sum or in 5 installments.

Conclusion: Sukanya Samriddhi Yojana emerges not only as a financial instrument securing a girl child’s future but also as a tax-saving avenue for parents and guardians. With features like tax-free investments, flexibility in premature closure and withdrawals, and the potential for significant returns, SSY aligns with the government’s commitment to empowering and uplifting the status of girl children in society.

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Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. Readers are encouraged to consult with financial experts for personalized guidance based on their specific circumstances.