Sukanya Samriddhi Yojana (SSY) : Features, Eligibility & Benefits

What is SSY?

SSY was introduced in 2015 as part of the Government of India’s ”Beti Bachao Beti Padhao” to tackle issues related to education and the marriage of girl children. SSY provides the parents of girl children with the building of such funds to facilitate the education and marriage of their girl child. It proposes to create a savings fund for girls, with the interest earned deductible from income tax under Section 80C of the Income Tax Act.

Aims of SSY:

• Ensures the safety and survival of the girl child.
• Ensures that a higher number of women participate in education and other fields.
• Reduces the practice of sex determination.

Full Form of SSY

SSY stands for Sukanya Samriddhi Yojana. SSY was introduced in 2015 as part of the Government of India’s ”Beti Bachao Beti Padhao” to tackle issues related to education and the marriage of girl children.

Features of Sukanya Samriddhi Yojana (SSY)

1. Operation: The account can be used by the guardian or parents unless the girl enters the age of ten. When the daughter reaches the age of 18, she must run the account.

2. Duration of the Scheme: Deposits for the plan should be made over a 15-year period. The system, however, it matures after 21 years.

3. Transfer of Account: Anywhere in India, an SSY accounts can be migrated from the post office to banking institutions and vice versa. There will be no fees associated with the account transfer. However, documentation of residency change is required. If no proof is provided, a ₹100 fee will be charged.

4. Mode of Deposit: Deposits to the accounts can be paid via internet transfer, demand draught, check, or cash.

Eligibility for Sukanya Samriddhi Yojana (SSY)

The following are the Sukanya Samriddhi Yojana account eligibility criteria:

• A girl child’s parent or legal guardian can open an SSY account on her behalf until she reaches the age of ten.
• The daughter child must be an Indian resident.
• In a household, up to two separate accounts for two daughters can be opened.
• In the case of twin girls, an additional Sukanya Samriddhi Yojana can be set up.

How do I Open a Sukanya Samriddhi Account?

The following are the procedures you must take to open a Sukanya Samriddhi Account:

• Fill up the application form at your nearest bank or post office.
• After you have completed the application, send it along with all required papers.
• Pay the first deposit, which can range from ₹250 to ₹1 lakh.
• The bank or post office will verify the application form and payment, and if all of the facts are valid, an SSY account will be opened in your name.

Advantages of Sukanya Samriddhi Yojana Scheme (SSY)

The Sukanya Samriddhi Yojana (SSY) plan was introduced as part of the Beti Bachao Beti Padhao (BBBP) programme with the primary goal of safeguarding a girl child’s future.

1. Affordable Payments: The minimum account balance necessary to keep a Sukanya Samriddhi Yojana is ₹250 every fiscal year. One can make deposits of up to ₹1.5 lakh per fiscal year, making it affordable to people from all walks of life. In the event that you skip a payment for a year, a penalty charge of ₹50 will be applied to the minimum payment of ₹250, but the account will continue to operate.

2. Educational Expenses Paid: You can withdraw 50% of the account balance as of the preceding fiscal year’s end to fund your girl child’s school expenditures. This can be obtained by submitting proof of enrolment.

3. Attractive Interest Rates: When compared to other government-backed plans, Sukanya Samriddhi Yojana accounts provide high interest rates. The current rate is 8% every year.

4. Guaranteed Returns: As SSY is a government suported initiative, returns are guaranteed upon maturity.

5. Convenient Transfer: SSY account can be simply transferred from a bank to a post office or from a post office to a bank in any part of India.

6. Tax Advantages: To encourage investment in SSY, the plan provides certain tax advantages,

• Section 80C Deductions: Investments in the SSY plan are deductible under Section 80C of the Income Tax Act, up to a limit of Rs. 1.5 lakh.
• Tax-Exempt Earnings: The amount of interest that accumulates on the Sukanya Samriddhi Yojana accounts is tax-free under Section 10 of the Income Tax Act.
• Tax-Free Proceeds: The proceeds received from the SSY account upon maturity or withdrawal are likewise tax-free.

Disdvantages of Sukanya Samriddhi Yojana Scheme (SSY)

1. Lock-In Period: Only long-term investors should utilise the account. It matures 21 years after account opening.

2. Limited Number of Accounts Allowed: Only two Sukanya Samriddhi accounts are allowed. This disadvantages someone with three daughters. The only exception is in case of twins or triplets, which allow 3 accounts.

3. Pre-Mature Withdrawal: Only in the sad demise of the child, the scheme allows withdrawal before maturity.

4. Variable Interest Rate: The government modifies all small savings plan interest rates quarterly. This might be disappointing for some investors. 

Tax Benefits of Sukanya Samriddhi Yojana (SSY)

The Sukanya Samriddhi Yojana (SSY) offers tax-saving benefits and a tax-free investment option for parents. Its exempt-exempt-exempt (EEE) status allows contributions to be tax-deductible under Section 80C of the IT Act, with deductions up to ₹1.5 lakh rupees. Investments in the scheme are tax-free, and interest earned is tax-free. This tax-free status can help build a substantial corpus for the future of the girl child. The government-sponsored Sukanya Samriddhi Yojana (SSY) encourages girl savings. Its governmental assurance and EEE status make it appealing. Yet, its 21-year lock-in may hinder early entry. Tax-saving ELSS delivers double-digit gains with a three-year lock-in.

Frequently Asked Questions on Sukanya Samriddhi Yojana (SSY)

1. What is the Age Relaxation Granted to Girl Children with the Sukanya Samriddhi Scheme?

Answer: Because the Sukanya Samriddhi plan is new, the administration does not want a few people to miss out on it because of age restrictions. As a result, any girl child who has turned 10 years old exactly one year before the scheme’s inception is likewise entitled to participate. As a result, every girl child born between December 2, 2003, and December 1, 2004, is eligible for the Sukanya Samriddhi Scheme.

2. Who Is Eligible to Open a Sukanya Samriddhi Account?

Answer: The legal guardian or parents of a girl child may open a Sukanya Samriddhi Account on her behalf.

3. What Happens if the Beneficiary Girl Child passes away Unexpectedly?

Answer: In the event of a girl child’s death, the Sukanya Samriddhi Account is ended and closed, and the proceeds are handed to the girl child’s guardian or father.

4. What would happen if the Depositor (The Girl Child’s Parent or Guardian) Died?

Answer: If a girl child’s formal guardian or parent dies, the plan is either shut down and the money given to the girl child’s family or the girl child herself. Or, the scheme is kept going with the amount that was deposited until the maturity date. The amount that was deposited continues to make interest until the girl child turns 21 years old.

5. Is it possible to convert my regular bank deposit account to a Sukanya Samriddhi account?

Answer: No, the option of converting a deposit account to a Sukanya Samriddhi Account is currently unavailable. Sukanya Samriddhi is a particular plan targeted at improving the financial situation of females in the country, and as such, account conversion is not permitted.