Sukanya Samriddhi Yojana Account: New Scheme for a Girl Child in India
Save for every girl child in India. Reinforcing this idea, Prime Minister Narendra Modi launched ‘Sukanya Samriddhi Account Scheme’, a small savings scheme as a part of the ‘Beti Bachao Beti Padhao’ campaign. It is also considered a part of the government’s initiative to increase the percentage of domestic savings, which has reduced from 38% of the GDP in 2008 to 30% in 2013. This scheme will encourage parents to save for the education and future of their girl child.
How to Open the Sukanya Samriddhi Account?
- Guardian to open the account: The account can be opened only by parents or legal guardians for upto two girl children. In case of twins or triplets, an exemption will be made on production of a certificate from authorised medical institutions.
- Age Eligibility: A Sukanya Samriddhi account can be opened for a girl child till she attains the age of 10. The scheme started from 2 December, 2014. An initial grace period of one year has been announced for convenience. A girl child, who is born between 2 December, 2003 and 1 December, 2004, can open account by 1 December, 2015.
- Residence: The girl child should be an Indian resident throughout the term of the scheme.
- Account in the name of the beneficiary: Sukanya Samriddhi Scheme can only be opened in the name of the girl child. The depositor (guardian) will be an individual, who deposits amount in the account on behalf of the minor girl child.
- One Girl One Account: Only one account can be opened per girl child.
- Where to open Account: Sukanya Samriddhi account can be opened in Post Offices or authorised Banks (State Bank of India, Bank of Baroda, Punjab National Bank, Bank of India, Canara Bank, Andhra Bank, UCO Bank, and Allahabad Bank, to name the few).
Sukanya Samriddhi Yojana Account More Details
- Account Transferability: The account can be opened with an amount of Rs. 1000. It can be transferred from the original location to anywhere in India as the girl child relocates.
- Minimum Contribution: A minimum contribution of Rs. 1000 per account has to be deposited per year. A maximum of Rs.1, 50,000 per account can be deposited. There is no limit in the number of deposits in a financial year. The money can be deposited through cash, cheque or draft.
- Penalty: A penalty of Rs.50 will be imposed if the account is not credited with the minimum amount.
- Rate of Interest: The scheme is offering an interest rate of 9.1% per year. However, it will be revised in April every year and the change will be communicated subsequently. The interest will be compounded yearly and directly credited to the account.
- Term Period: The guardian is expected to deposit amount in the account only till the completion of 14 years. No deposits after that is required till the maturity of the account.
- Withdrawal: A premature withdrawal (at the end of the previous financial year) of 50% of the accumulated amount is allowed after the girl child turns 18.
- Closure of Account: The account can be closed only after the child turns 21. If the money is not withdrawn even after that, it will continue to earn the interest.
- Taxation: As per Section 80C of Income Tax Act, the investment (up to Rs.1.5 lakhs) under the scheme, all the payments including the interest payment and the total maturity amount will be fully exempted from taxation.
- Documents required at the time of closing account: An application for account closure, proof of identity, residence and citizenship
What Are the Documents Required for Opening an Account?
- Birth Certificate of the girl child.
- Address and photo identity proof (PAN Card, Voter ID, Aadhar Card) of the guardian.
Interest Rates on Sukanya Samriddhi Account Scheme reduced to 8.6 %
In addition to the interest rate on Public Provident Fund (PPF) scheme being slashed from 8.7 per cent to 8.1 per cent, the interest rates on Sukanya Samriddhi Account Scheme have also been reduced from 9.2 per cent to 8.6 per cent. The decision is expected to enable the banks to reduce their deposit rates and also extend loan and credit to the borrowers at decreased rates.
The Sukanya Samriddhi Account has undergone a number of key changes since its launch in 2014. Those willing to avail of the scheme should take a note of these changes. The changes are as follows:
- The scheme’s provisions have now been extended to adopted daughters as well.
- Besides cash and cheque, deposits can be made electronically as well in case the bank or post office has the facility of core banking solution.
- The amount invested is eligible for deduction under Section 80 C and follows Exempt-Exempt-Exempt (EEE) tax regime.
- Earlier, the account could be deemed closed at the time of marriage of the girl child. However, according to new rules, the account can be continued till the age of 21 even if married by that time.
- One could withdraw 50% of the accumulated amount before for education purpose, provided she is 18 year of age or passed Standard 10th. But now withdrawal will be permitted on the basis of the fees payable. The amount can be withdrawn as a lump sum or in course of five yearly installments.
- Premature closure of account is not permissible before the completion of five years though exemption is allowed on compassionate grounds such as medical aid in life-threatening diseases.
In an effort to incentivise savings for the girl child, the government of India has kept interest rates for the Sukanya Samriddhi Yojna accounts unchanged for the January to March 2017 period. These accounts will continue to pay an annual interest of about 8.5 percent. It is a much better instrument of saving for the girl child than many others. The average interest on savings bank accounts for this period is 4 percent, term deposits with a maturity date between 1 to 5 years fetch 7 to 7.8 percent interest. Recurring deposits running for a 5-year period fetch an interest of 7.3 percent, while the Kisan Vikas Patra (KVP) interest for this quarter is pegged at 7.7 percent. PPF Account will fetch an interest of 8 percent for this quarter. For a comparative study of the advantages of Sukanya Samriddhi Yojna click here.
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