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Central Government’s ‘Sukanya Samriddhi Yojana’ (SSY) is one of the most popular and trusted savings schemes for financial preparations for your daughter’s secure future, higher education and marriage. The government is currently offering an interest rate of 8.2% compounded annually on this scheme, which is much higher than PPF and most bank fixed deposits. The biggest feature of this scheme is that it gives full benefit of long term compound interest (Power of Compounding).
If you want to create a strong corpus of around ₹69 lakh (approximately ₹69,31,745) on maturity of 21 years, you will have to deposit the maximum limit of the scheme i.e. ₹1,50,000 every financial year. If we look at it on a monthly basis, you will have to save an average of ₹ 12,500 every month or about ₹ 410 per day. After 15 years of investment and lock-in of next 6 years, this small savings translates into a huge capital gain of more than 3 times on maturity.
As per the rules of Sukanya Samriddhi Yojana, money has to be deposited only for the first 15 years from the date of account opening. From the 16th year to the 21st year i.e. in the last 6 years, the account holder does not have to pay any additional amount from his own pocket. However, during this period, compound interest continues to be added on the entire principal amount deposited in the account and the previous interest as per the then fixed interest rate.
As per financial calculations, by depositing ₹1.5 lakh every year, your total investment in 15 years will be ₹22,50,000 (Rs 22.5 lakh). Assuming the current fixed interest rate of 8.2%, the total interest amount including interest earned in 15 years and compound interest for the next 6 years comes to approximately ₹ 46,81,745. Thus, on completion of the period of 21 years, the total maturity amount received by the daughter becomes ₹ 69,31,745 (approximately ₹ 69.32 lakh).
Sukanya Samriddhi Yojana account can be opened in the name of any Indian citizen daughter from the time she is born till she completes 10 years of age. This account can be opened by parents or legal guardian in any authorized commercial bank or post office branch. This account is allowed to be opened only for a maximum of two daughters in a family.
However, if twins or triplets are born after the first daughter, then under the rules, the account can be opened in the name of the third daughter also by presenting the medical certificate. To open an account, valid birth certificate of the daughter, Aadhar card of the guardian, PAN card and proof of address are the required documents. When the daughter completes the age of 18 years, she becomes legally entitled to operate her own account.
Sukanya Samriddhi Yojana has ‘EEE’ (Exempt-Exempt-Exempt) category status under the Income Tax Act. This means that the account holder gets complete exemption from tax at all three stages of investment:
In the first phase, the amount deposited every year gets the benefit of tax deduction up to ₹ 1.5 lakh under Section 80C of Income Tax. In the second phase, no tax or TDS is deducted on the interest credited to the account every year. In the third and most important phase, when the maturity amount of approximately ₹ 69 lakh comes into the hands of the daughter after 21 years, then the Government of India has to pay zero tax on that also. In terms of security and tax savings, this scheme is completely protected by sovereign guarantee.
The maturity period of the scheme is 21 years, but keeping in mind the emergency and education, the government has given special exemption for partial withdrawal. When the daughter completes 18 years of age or passes 10th class, up to 50% of the total balance at the end of the previous financial year can be withdrawn for her higher education (college fees, admission charges). For this, it is mandatory to submit the admission offer letter and fee structure of the concerned educational institution.
If the daughter gets married after the age of 18 years, then the entire account can be prematurely closed by applying 1 month before or 3 months after the date of marriage. Apart from this, if for some reason the account holder forgets to deposit a minimum of ₹250 in a year, the account becomes default. Such accounts can be easily reactivated by paying a penalty of ₹50 for every missed year and depositing a minimum amount of ₹250.