Why you should open the Sukanya Samriddhi Yojana Account for your daughter today!

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The Sukanya Samriddhi Yojana was launched with the purpose to encourage parents to invest in their daughter's higher education and marriage

The Sukanya Samriddhi Yojana has received a lot of attention and response from parents this past year. Since it offers 8.6 percent interest rate, they are keen to invest their money in a scheme that would yield their daughters great returns.

But, many parents are finding it difficult to gather all the information about this rather profitable scheme. So we culled out all the basic information you need to understand the scheme and how to apply for it. You will also learn more about the eligibility criteria and withdrawal status.

What is Sukanya Samriddhi Yojana?

This scheme was launched by the government under the Beti Bachao, Beti Padhao Campaign last year in January. It's purpose was to encourage parents to invest in their daughter's higher education and marriage.

Since this account is meant only for a girl child, parents or legal guardians can open one in her name. The only criteria is that the girl should be 10 years or younger.

Another interesting feature of this scheme is that a guardian can open only one account in the name of one girl child and maximum two accounts in the name of two different girl children. However, if you have twin girls and then another girl, you can open three accounts.

To open an account under this scheme, you can use this application form. It is also available with post offices across the country. In addition, you would require the following documentation for opening this account.

  • Birth certificate of your daughter
  • Identity proof of the depositor
  • Residence proof of the depositor

What is the investment criteria?

To open an account under the Sukanya Samriddhi Yojana, you can go to any of the 28 designated banks in India. These banks have been listed by the Reserve Bank of India in this circular.

As per the scheme, there are set guidelines on the amount that you can invest and when you can invest it. Here's a summary:

  • In the first year, the parents or legal guardians can invest a minimum of Rs 1,000. After the first year, they can also invest in multiples of Rs 100.
  • Investment is a maximum of Rs 1, 50,000
  • Deposit can be made in lump-sum as well as separately
  • There is no cap on the number of deposits either in a month or in a financial year
  • You can even use a cheque or Demand draft, however currently no online payment method is available. So you will have to go the bank and deposit the amount.

Continue reading to know about the tax implications of this scheme. 

Tenure of Sukanya Samriddhi Yojana

Deposit that you make under this scheme will mature 21 years after opening of the account. Remember that deposits must be made till up to 14 years from opening the account.

In case you fault on depositing that Rs 1,000, your account will be deactivated and can only be activated after you have paid a fine of Rs 50.

Now the question is can you withdraw the money before the account turns 21? The answer is, yes! You can withdraw 50 percent of the deposit amount for marriage or higher education of your daughter, once she reaches 18 years of age.

Tax implications of this scheme

Although this scheme offers no insurance feature, the interest is income tax free. However, the deposit under this scheme is eligible for deduction u/s 80C. And, a maximum Rs 1,50,000 p.a can be claimed as deduction u/s 80C.

Plus, maturity as well as Interest amount of the scheme will be paid to your daughter and will be entirely tax-free in her hands.

There are also strict rules for termination of this account.

Termination of the Scheme

  • The tenure of the scheme is 21 years from date of opening, or till the daughter gets married; whichever happens earlier.
  • This account will compulsorily have to be closed after marriage of the daughter
  • In case after maturity of the account (21 years) the girl child does not marry, and if account is not closed after maturity, balance will continue to earn interest as specified for the scheme from time to time.

Take a look at this video to simply understand the scheme:

Read: Delhi High Court: Only a mother's name is sufficient to apply for a passport

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(Image courtesy: Huffpost)

Written by

Deepshikha Punj

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