Sukanya Samriddhi Yojana ( SSY ) – Eligibility, Tax Benefits & Rules

In order to majorly address the issue of the declining child sex ratio in our country, the Government of India launched a social campaign on  January 22, 2015. The Beti Bachao Beti Padhao (BBBP) campaign sends the message ‘Save girls, educate the girl child’. This is a national initiative jointly run by the Ministry of Women and Child Development, the Ministry of Health and Family Welfare, and the Ministry of Human Resource Development. BBBP aims at achieving the following:

(i) To stop gender discrimination of children and abolish the practice of sex determination.

(ii) To ensure the survival and protection of girls.

(iii) To ensure higher participation of girls in education and other areas.

1. What is the Sukanya Samriddhi Yojana (SSY)?

SSY aims at tackling a  major problem associated with the girl child – education and marriage. It is focused on securing a bright future for the girl child in India by facilitating the parents of a girl child in building a fund for the proper education and a carefree marriage expenses of their child. SSY has introduced the Sukanya Samriddhi Account for this very purpose.

2. What are its rules?

Particulars	Provisions as per the SSY Rules 2016
Who would be the beneficiary of the SSY account	Any girl child who is a resident Indian, from the time of opening the account, till the time of maturity/closure
Who can open the account?	Parents or legal guardian of a girl child who has not attained the age of 10 years, can open the account
Who can deposit and operate the account?	Either the guardian or the girl child (if she has attained the age of 10 years) may deposit the amount and operate the account The account shall be mandatorily operated by the girl child after she attains the age of 18 years.
Number of accounts	Only one account per girl child Accounts can be opened for a Maximum of two girl children in one family, (including adopted children) Accounts for more than two girl children are allowed in case of more than two girls being born in the first order of birth, or in a scenario of one girl child in the first order of birth, and twins or more than twins in the second order of birth
Where can an SSA account be opened?	In any post office or authorized branch of commercial banks
Documents required to open the Account	Birth certificate of the girl child Identity and residential proof of the guardian Medical certificate for proof of birth of multiple girl children on a single order of birth Any other documents as required by the post office or banks
When can an SSA account be opened?	Any time between the birth of the girl child till the time she attains the age of 10 years
Deposit threshold and tenure	Minimum of Rs 250 (this amount was previously Rs 1,000), and a maximum of Rs 1,50,000 in every financial year, up to 15 years Multiples of Rs 100, subject to the above cap
Mode of Deposit	Through cash, cheque, demand draft or online transfer
Interest on deposits	The rate of interest for the 3rd quarter of FY 2018-19 i.e. 1 October 2018 to 31 December 2018 has gone up from 8.1% to 8.5% The entire deposit in ‘Account under default’ (where a minimum amount of Rs 250 has not been deposited), which is not regularised within the prescribed time, would earn interest on the post savings bank account; except if the default is due to the death of the guardian who opened the Account No interest is payable after the completion of tenure of the SSY, i.e after 21 years from account opening No interest accrues after the girl child becomes a non-citizen or a non-resident of India
Consequences of excess or short deposit	Excess –  Any deposit above the maximum cap will not earn any interest and can be withdrawn anytime by the depositor Shortage – Account shall be considered as ‘Account under default’ if no minimum deposit is made in a financial year, and can be regularised within 15 years of Account opening on payment of a penalty of Rs 50 per default year
Tenure of SSA	21 years from the account opening date
Rules pertaining to the closure of SSA	Closure on maturity Account matures after completion of tenure of 21 years and the balance in the SSA, including interest, is paid to the child on submitting an application and proof of identity, residence, and citizenship documents Premature Closure Allowed only in the following situations: Reasons of intended marriage after a girl child attains the age of 18 years, an application can be submitted between one month prior to marriage and 3 months after marriage along with her age proof documents Death of the girl child on the production of the death certificate the balance in the SSA will be paid to the guardian Deemed closure in case of a change in the status of girl child i.e., girl child either becomes a non-resident or a non-citizen of India. Such a status change shall be communicated by the girl child or her guardian within one month of the status change After completion of 5 years from the opening of an SSA, if the post office or Bank is satisfied that the operation or the continuation of the SSA is causing undue hardship to the girl child (such as the death of the guardian, medical reasons of the girl child), the girl child or guardian may order for premature closure For any other reasons, if the SSA is to be closed anytime after the opening of this account, it will be permitted, but the entire deposit would only earn an interest rate applicable to post office savings bank
Withdrawal	This is allowed for purposes of higher education if the girl child has either attained 18 years or completed 10th standard of school, for meeting the actual fee or other charges required at the time of admission Documentary proof by way of a confirmed offer of admission in an educational institution, or a fee slip shall accompany the application for withdrawal Withdrawal has a maximum cap of 50% of the balance in the SSA at the end of the preceding financial year. This can be made in either one lump sum or in 5 installments
Transfer of balance of the SSA	Balance in the SSA can be transferred anywhere in India – from or to post offices, from or to banks, and between post offices and banks free of cost. This can be done upon furnishing of proof of change of residence of either the guardian or the girl child. Under any other circumstance, such a transfer can be made by paying a fee of Rs 100.

   

3. Sukanya Samriddhi Yojana interest rate

1. The rate of interest for the 4th quarter of FY 2018-19 i.e. 1 January 2019 to 31 March 2019 has been kept unchanged to 8.5%.

2. The rate of interest for the 3rd quarter of FY 2018-19 i.e. 1 October 2018 to 31 December 2018 was 8.5%.

3. The entire deposit in ‘Account under default’ (where a minimum amount of Rs 250 has not been deposited), which is not regularised within the prescribed time, would earn interest on the post savings bank account; except if the default is due to the death of the guardian who opened the Account.

4. What are the tax benefits provided to SSY?

In order to encourage investments in SSY, the SSA has also been provided with certain tax benefits:

1. Investments made in the SSY scheme are eligible for deductions under Section 80C, subject to a maximum cap of Rs 1.5 lakhs
2. The interest that accrues against this account which gets compounded annually is also exempt from tax
3. . The proceeds received upon maturity/withdrawal are also exempt from income tax

For Further Reading and Understanding

• How to Open as SSY Account in HDFC?
• How to Open an SSY Account with State Bank of India?
• Post office saving schemes