Sukanya Samriddhi Yojana (SSY) Interest Rate 2024, Eligibility, and Taxation

In this article, we will discuss

• What is the Sukanya Samriddhi Yojana (SSY)?
• Key Features and Benefits of the Sukanya Samriddhi Yojana
• Eligibility Criteria for Investing in the Sukanya Samriddhi Yojana
• Documents Required for Investing in the Sukanya Samriddhi Yojana
• Sukanya Samriddhi Yojana: Interest Rates for 2024
• Sukanya Samriddhi Yojana: Taxation Aspects
• Conclusion

Gender inequality is one of the many issues that have plagued Indian society. To address this inequality and empower girl children, the government of India introduced the Sukanya Samriddhi Yojana (SSY). The scheme is designed to secure the financial future of girl children by encouraging their parents to save up for their education and marriage expenses.

Samco Securities offers a dedicated Sukanya Samriddhi Yojana calculator that can help you accurately estimate the returns from the investment. Additionally, the calculator also provides a detailed breakdown of the principal, interest generated during the investment period, maturity year, and final maturity value.

Coming back to this article, we are going to delve into the various intricacies of the Sukanya Samriddhi Yojana scheme, explore how it works, look into its eligibility criteria, and examine the various tax benefits that it offers.

What is the Sukanya Samriddhi Yojana (SSY)?

Launched in 2015 by the government of India, the Sukanya Samriddhi Yojana (SSY) is a small savings scheme designed to promote the welfare of girl children.

The Sukanya Yojana is a long-term savings instrument that enables parents and legal guardians of girl children under the age of 10 to open Sukanya Samriddhi accounts in the girl children’s names and make regular deposits until they reach the age of 21. The funds deposited in the account can be used to pay for the girl children’s education or marriage expenses.

One of the highlights of the SSY scheme is its unique structure. It combines the security of a government-backed scheme with the potential for high returns, making it an appealing choice for long-term financial planning.

Key Features and Benefits of the Sukanya Samriddhi Yojana

Let us now look at a few of the crucial Sukanya Samriddhi Yojana details, such as the scheme’s key features and benefits.

• High Interest Rates

The Sukanya Samriddhi Yojana interest rate is much higher compared to most traditional savings schemes. Even among other government-backed schemes, the interest rate on SSY is the highest. The potential for high returns incentivises families to save for their daughters’ futures, which has the effect of addressing issues of gender disparity and promoting financial independence among girls.

• Government Guarantee

Since the Sukanya Samriddhi Yojana is a government-backed scheme, it gets the benefit of a sovereign guarantee. The entire amount invested in the SSY account, along with the accumulated interest, is entirely secure and free from the risk of default.

• Flexible Deposit Options

The SSY scheme provides parents and legal guardians of girl children with the freedom to make flexible deposits. The minimum amount of deposit that must be made during a financial year is just Rs. 250. This makes the scheme accessible to individuals across all walks of life.

The maximum amount that can be invested in the scheme during a financial year is Rs. 1.5 lakh. Additionally, the deposit can be made as a single lump-sum investment or through periodic instalments.

• Partial Withdrawal Facility

The Sukanya Samriddhi account has a partial withdrawal facility. Under the partial withdrawal facility, up to 50% of the balance in the account at the end of the financial year preceding the year of partial withdrawal can be withdrawn to pay for the higher education expenses of the girl child. However, partial withdrawal is only available once the girl child has passed the tenth standard or reaches 18 years of age, whichever is earlier.

• Transfer Facility

In the event of a change in the residence of the girl child, the Sukanya Samriddhi account can be transferred from one location to another by submitting a transfer request form. The account can also be transferred from one bank to another bank, from a post office to a bank, or from a bank to a post office.

• Multiple Accounts

The Sukanya Samriddhi Yojana enables parents to open separate accounts for up to two girl children. In the case of twin girl children in the second birth, the parents can open up to three SSY accounts.

• Long-term Investment

Parents and legal guardians of girl children can continue investing in a Sukanya Samridhhi account for a maximum tenure of up to 21 years, provided they open the account just after the birth of the children. The long tenure allows for significant wealth accumulation through compound interest.

Eligibility Criteria for Investing in the Sukanya Samriddhi Yojana

Only individuals who satisfy certain eligibility criteria can open an SSY account in the name of a girl child. The criteria are straightforward but specific. Here is a quick overview of the same.

• The girl child for whom the parents or legal guardians are looking to open an SSY account must be below the age of 10 years.
• The scheme is available only for girl children who are Indian citizens residing in India. Non-resident Indians (NRIs) are not eligible to open an SSY account.
• Sukanya Samriddhi accounts are limited to one per girl child.
• Parents can open accounts for a maximum of two girl children (except in the event of twin girls born in the second birth, in which case a maximum of three accounts can be opened).

Documents Required for Investing in the Sukanya Samriddhi Yojana

When opening an SSY account, parents or legal guardians are required to submit a set of documents along with the application form. Let us quickly look at the documents that need to be submitted.

• A filled-out application for opening an account under the Sukanya Samriddhi Yojana in Form-1.
• A copy of the birth certificate of the girl child to prove her age and eligibility.
• A copy of the identity proof of the parent or guardian opening an SSY account on behalf of the girl child.
• A copy of the address proof of the parent or guardian opening an SSY account on behalf of the girl child.
• A copy of the documentary evidence proving legal guardianship over the girl child for whom the account is being opened (applicable only for guardians).
• A recent passport-size photo of the girl child and her parent or legal guardian.

Sukanya Samriddhi Yojana: Interest Rates for 2024

The Sukanya Samriddhi Yojana interest rates are set by the government of India. The interest rates are reviewed and updated every quarter based on the prevailing interest rate scenario and market conditions. As of 2024, the Sukanya Samriddhi Yojana continues to offer the highest interest rates among small savings schemes in India.

For the first and second quarters of the financial year 2024-2025 (April to September 2024), the Sukanya Samriddhi Yojana interest rate has been set at 8.2% per year. This rate is compounded annually, which means the actual returns over the long term would be even higher.

Sukanya Samriddhi Yojana: Taxation Aspects

The Sukanya Samriddhi Yojana offers significant tax advantages, making it an even more attractive investment option for parents and legal guardians of girl children. The SSY scheme is one of the few investment options in India to be classified as an Exempt-Exempt-Exempt (EEE) investment. This essentially means that the principal amount of the investment, the interest earned, and the final maturity value are all tax-free. Here is a more in-depth overview of the key taxation aspects of the scheme:

• Tax Deduction on Contributions

Contributions to the Sukanya Samriddhi account are eligible for section 80C tax deductions. The maximum amount that can be claimed during a financial year is limited to Rs. 1.5 lakh. By deducting SSY contributions from the total income, parents and guardians of girl children can effectively reduce their tax liability.

• Tax-Free Interest

The interest earned on the SSY account is completely tax-free, as per section 10(11) of the Income Tax Act. This essentially means that the interest accrued every year is not added to the taxable income of the parent or the legal guardian.

• Tax-Free Maturity Amount

The amount that the girl child received upon maturity of her SSY account is also fully exempt from tax.

• No TDS

The provisions of tax deduction at source (TDS) do not apply to the Sukanya Samriddhi Yojana scheme. This means that TDS on the interest earned or the maturity amount will not be deducted.

Conclusion

The Sukanya Samriddhi Yojana is a goal-oriented savings scheme that aims to address multiple objectives, from encouraging long-term savings to promoting the welfare of girl children. Even as we navigate through 2024, the scheme continues to be a relevant and beneficial investment option for parents and guardians of girl children in India.

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