What Is Sukanya Samriddhi Scheme And Why Is It A Good Investment

By Author: ArjitChalmela
Total Articles: 18
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The Sukanya Samriddhi Yojana is a beneficial small savings scheme that parents can open for a girl child. The SSY was introduced in 2015 by the Government of India as a part of its Beti Bachao Beti Padhao campaign with a motive of building a corpus for the girl child. The objective of the scheme is to make the girl child financially independent.

Under this scheme, a Sukanya samriddhi account is opened in the name of the girl child with contributions that can be made from a minimum of Rs. 250 a year to a maximum of Rs. 1,50,000 a year. These contributions earn interest and through compounding, the capital grows for the girl child till the time of maturity.

An investment in the Sukanya Samriddhi Scheme is a good investment for your girl child. Even though the scheme has a lock in, it has some excellent benefits.

Here is why SSY is a good investment:

Tax benefits:

In terms of tax benefits, the Sukanya Samriddhi yojana is similar to the Public Provident Fund. Any contribution made into this account gets a deduction under ...
... Section 80C of the Income Tax Act up to INR 1.5 lakh. The interest earned on this account is exempt from tax. It is not considered as income in the hands of the parents or the girl child. Once the account matures, any amount lying to the credit of the account can be withdrawn without any further tax implications on withdrawal. This makes the Sukanya Samriddhi Account an Exempt-Exempt-Exempt (EEE) investment.

High Interest rate:

At present, the Sukanya Samriddhi Account earns the highest rate of interest as compared to other investment options. The current rate of interest is 8.1% which is significantly higher than other instruments. Interest is calculated on the deposits and is compounded annually.

Interest on balance:

A Sukanya Samriddhi scheme earns interest on the balance to the credit of the account. You can make deposits into this account for 14 years after the account is opened. It will mature after 21 years of account opening. However, till the time the account is closed, the balance to the credit of the account continues to earn interest.

All girl children:

The Sukanya Samriddhi Account can be opened for a biological girl child and for an adopted girl child. The scheme doesn’t distinguish between girl children. This scheme can be opened for two girl children and in case the second birth is a multiple birth with girl children then accounts can be opened for all those girl children.

Withdrawals:

The funds in a SSY can be withdrawn only after maturity. Premature withdrawals can be made to fund the girl child’s wedding expenses and for her education expenses. These premature withdrawals are restricted to 50% of the total balance in the SSY account. Any sum withdrawn is payable only to the girl child. This can go a long way in improving the financial independence of a girl child.

Other features:

The Sukanya Samriddhi scheme allows the girl child to administer her account once she turns 10 years of age. Apart from that, the funds can only be withdrawn on the girl’s majority for higher education or for her marriage expenses. This account cannot be attached by the court to meet the parent’s expenses. This secures the investment for the girl child.