Our noted Prime Minister, Narendra Modi had recently talked about the “Beti Bachao, Beti Padhao” when he launched the Sukanya Samriddhi Yojana, which was eligible for exemption in 80C. In the latest budget speech, the Finance Minster proposed to make the interest component and also the maturity proceeds as tax-free.
To think of it, this scheme has now become the best small savings scheme available to investors who are otherwise conservative while investing. But is usually this scheme even better than our good old Open public Provident Fund (PPF)? Let’s notice what this scheme has to offer and compare the two.
Opening of SSY scheme
Today, Sukanya Samriddhi Yojana is a small savings scheme which can be opened by the parents or perhaps a legal guardian of a girl child in any post office or authorised branches of some of the commercial banks like State Bank of India, Bank of Baroda, Canara Bank and so on. Here, the girl child is termed as the “Account Holder” and the guardian is the “Depositor”. See Sukanya Samriddhi Yojana Form.
Any parent or legal guardian of a girl child who is 10 years or below can open this account in the name of the child. In a bid to make this scheme operational, an one year grace period of 11 decades has been announced. Between December 2 this means that a parent or legal guardian of any woman child who is born, 2003 and December 1, 2004, can open an account, with validity becoming December 1, 2015. You shall need the birth certificate of the girl child, along with an identity residence and proof while opening an account under this scheme. In case you have two daughters, you can open two accounts but the total amount invested cannot go beyond Rs 1, 50,000 per annum.
Rate of Interest
The rate of interest flagged off for this scheme is at 9.1 per cent, which is higher than that of PPF at 8.7 per cent. Having said that, this rate of 9.1 % is not fixed for the tenure and will be revised every financial year just like all other small savings schemes, including PPF.
When the recent Union Budget stated that this scheme would be exempted from taxes, almost all investors who after that found an interest rate of 9. 1 per cent quite unappealing are keen on opting for it now, say experts. The curiosity amount will get included to your account balance and is compounded wither regular or annually, as per your choice. Because this is a debt-based scheme, it may not offer very high returns and hence may be used in a combination with additional saving schemes, note experts.
Duration of the Scheme
The scheme matures on completion of 21 years from the time of opening the amount. Say if the account is not closed on maturity after 21 years, the balance amount will still continue to earn interest every year. In case your daughter’s marriage takes place before the maturity time i.e. before the completion of 21 years, you cannot operate the account beyond this date and no interest will be payable.
Amount to be deposited/ invested
While the scheme carries duration of 21 years, you are not required to make contributions for all these 21 years. You can invest only for the first 14 years, after which you need not deposit any further amount. However, your account shall keep earning an interest rate for the remaining seven years. One can deposit a minimum quantity of Rs 1,000 in order to keep your account active annually. If you fail to do so, your account turns inactive and will be retrieved only after paying a penalty of Rs 50 together with the minimum quantity of Rs 1,000. You could invest a maximum quantity of Rs 1, 50,000 annually, either by making regular contributions every month or by investing a lumpsum.
Premature closure and partial withdrawal
One can close the account as your girl turns 18 provided she gets married before the withdrawal. You are allowed to withdraw 50 per cent of the balance standing at the end of the preceding economic year, only after your girl turns 18. In a way, there is a lock-in period of at least eight decades. You cannot withdraw any amount before this period.
While there is no nomination facility available as of now, in case of an unfortunate event like loss of life of a girl child, the account will be closed and the money will be handed over to the parent or guardian of the account holder.
If I invest x Rs into the Sukanya Samriddhi Scheme account monthly, how much money will I get on account maturity? This is one of the most common queries we receive on everyday basis. After reading through all the details of the account, every investor wants to know that how much money their investment can make. So we have developed Sukanya Samriddhi Scheme Calculator. This calculator is simple to use and free for all. Our aim here is to allow every investor to produce an informed decision about where and how much money they want to put in.