All you need to know about the Tax benefit of Sukanya Samridhi Yojana for girl child
In order to implement a sustained social mobilization and communication campaign to create equal value for the girl child and promote her education, the Government of India in 2015 launched the “Beti Bachao, Beti Padhao” campaign that aimed to generate awareness and improve the efficiency of welfare services intended for girls in India. The “Sukanya Samridhi Yojana” was one such innovation of the Beti Bachao, Beti Padhao campaign.
What is the Sukanya Samridhi Yojana?
Sukanya Samriddhi Yojana is one of government-backed small savings schemes under the Beti Bachao, Beti Padhao campaign, that can help parents secure the future of their girl child. One of the reasons why this scheme has become popular is due to its tax benefit. It comes with a maximum tax benefit of Rs 1.5 lakh under section 80C of the Income-tax Act. Further, the interest accrued and maturity amount are exempt from tax. A Sukanya Samriddhi Account can be opened under this Scheme in the name of a girl child till she attains the age of 10 years.
What are the eligibility criteria for opening a Sukanya Samriddhi Account?
- Only parents or legal guardians of the girl child can open a Sukanya Samriddhi account in the name of the girl.
- The girl child should be less than 10 years at the time of account opening. The account can be operational till the girl reaches the age of 21 years.
- A single girl child cannot have multiple Sukanya Samridhhi accounts.
- Only two Sukanya Samriddhi Yojana accounts are allowed per family i.e., one for each girl child.
- The account will have to be closed if the girl child becomes an NRI or loses her Indian citizenship.
Where can the Sukanya Samriddhi Account be opened?
- Account under this scheme can be easily opened in post offices and designated private or public banks and branches of authorised banks in the form of a savings account in the name of the baby girl.
- The birth certificate of the girl in whose name the account is opened should be submitted by the guardian at the time of the opening of the account in the post office or bank, along with other documents relating to identity and residence proof of the depositor.
What is the minimum initial investment required for opening a Sukanya Samriddhi Account?
The initial investment can start from Rs. 250 and a maximum of Rs. 1,50,000 annually with further deposits in the multiples of Rs. 100. A minimum of Rs. 250 must be deposited in a Financial year.
What happens if you do not put in minimum amount?
An irregular account where the minimum amount has not been deposited may be regularised on payment of a penalty of Rs 50 per year, along with the minimum specified subscription for the year (s) of default. If the penalty is not paid, the entire deposit, including those made before the date of default, will receive interest at post office savings bank account rate. If excess interest has been paid, it will be reversed.
What is the maximum investment one can make in a Sukanya Samriddhi Account?
Maximum Rs. 1,50,000 can be deposited in a financial year in a Sukanya Samriddhi Account.
What is the interest rate of the Sukanya Samriddhi Account?
Like other government savings schemes, the interest rates for Sukanya Samriddhi Yojana are declared quarterly. The government fixes interest rates on a quarterly basis based on government securities (G-sec) yields. From April 2020, this scheme offers an interest rate of 7.6% compounded annually.
How does the Sukanya Samriddhi Account operate?
- The account is opened and operated by the natural or legal guardian of the girl child in her name till she turns 10.
- When she turns 10, the girl child can operate the account herself, however, deposit in the account has to be made by the guardian or any other person or authority.
- A depositor is required to make deposits every year till the completion of 15 years from the date of opening of account.
- Between the 15th year and 21st year, no deposits are required to be made. However, you will be earning interest on the earlier deposits made.
How can a deposit be made under the Sukanya Samriddhi Account?
The deposit in the account opened may be made:
- in cash; or
- by cheque or demand draft drawn in favour of the postmaster of the concerned post office or the Manager of the concerned bank where the account stands and an endorsement on the back of such instrument shall be made and signed by the depositor indicating name of the account holder and account number in which the deposit is to be credited.
Where deposit is made by cheque or demand draft, the date of encashment of the cheque or demand draft shall be the date of credit to the account.
Can the Sukanya Samriddhi Account be transferred?
- The account can be transferred anywhere in India if the girl child in whose name the account has been opened shifts to a place other than the city.
- The transfer is free of cost up on furnishing proof of shifting of residence of either the parent/guardian or account holder.
- If no such proof is submitted, then the applicant will have to pay Rs 100 to the post office or the bank to which the transfer is made.
When is the maturity of the Sukanya Samriddhi Account?
The account shall mature on completion of 21 years from the date of opening of account or on the marriage of Account holder whichever is earlier.
Can the amount from the account be withdrawn before its maturity?
One withdrawal shall be allowed on attaining the age of 18 years of account holder to meet education expenses up to 50% of the balance at the credit of preceding financial year
Can the account be closed before its maturity?
- In the event of death of the account holder, the account will be closed immediately on the production of a death certificate.
- The balance in the account will be paid, along with the interest till the month preceding the month of the premature closure of the account, to the guardian of the account holder.
- In any other case, a request for the premature closure can be put forward after the completion of five years of the account opening.
- This too will be allowed, as per the rules, on extreme compassionate grounds such as medical support in life-threatening diseases.
- Still, if the account has to be closed for another reason, it will be allowed, but the entire deposit will only get interest of a Post Office Savings Bank account.
What are the tax benefits available under the Sukanya Samriddhi Yojana?
Sukanya Samriddhi Yojana comes with a maximum tax benefit of Rs 1.5 lakh under section 80C of the Income-tax Act. The principal invested, the interest earned as well as the maturity amount, are tax free.
The Sukanya Samriddhi Yojana is a clever scheme launched by the government for the betterment of the girl child. Millions of families worry about the future expenses, whether they are marriage expenses or education expenses, of a girl child. Using this scheme, they can slowly but steadily invest in their daughter’s future.
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