Rupakumar Pradhan, CFPCM, CWM®

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Sukanya Samriddhi Yojana – Maturity Value after 21 Years

Sukanya Samriddhi Yojana – Maturity Value after 21 Years

Sukanya Samriddhi Yojana – Maturity Value after 21 Years
November 03
11:54 2017

‘Sukanya Samriddhi Yojana’ (Girl Child Prosperity Scheme)

Sukanya Samriddhi Yojana (SSY) is a small deposit scheme for the girl child launched as a part of the ‘Beti Bachao Beti Padhao’ campaign and Launched on 22nd January 2015.

It is currently (2017-18) fetching an interest rate of 8.1 per cent and provides income-tax benefit.

A Sukanya Samriddhi Account can be opened any time after the birth of a girl till she turns 10, with a minimum deposit of Rs 1,000. A maximum of Rs 1.5 lakh can be deposited during the ongoing financial year.

A Sukanya Samriddhi Account can be opened in any authorised Post Office branch or authorised branches of commercial banks. Generally, all banks that provide the facility to open a Public Provident Fund (PPF) account offer one for Sukanya Samriddhi Yojana (SSY) too.

The account will remain operative for 21 years from the date of its opening or till the marriage of the girl after she turns 18.

To meet the requirement of her higher education expenses, partial withdrawal of 50 per cent of the balance is allowed after she turns 18.

What are the rules for opening Sukanya Samriddhi Account?
The account can be opened by the natural or legal guardian in the name of the girl from her birth till she turns 10.

A depositor may open and operate only one account in the name of the girl child under these rules. One can’t open two accounts for one 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.

Eligibility

  1. The account can be opened by the natural or legal guardian in the name of a girl child from the birth of the girl child till she attains the age of 10 years
  2. A depositor can open and operate only one account in the name of a girl child under the scheme rules
  3. Natural or legal guardian of a girl child can be allowed to open the account for two girl children only. The third account in the name of the girl child can be opened  in the event of birth of twin girls, as second birth or if the first birth itself results into three girl children

Features

  1. Attractive interest rate of 8.1%. Interest rate is regulated by Ministry of Finance from time to time
  2. Minimum Rs. 1,000 can be invested in one financial year
  3. Maximum investment of Rs. 1,50,000 can be made in one financial year
  4. Deposits in an account can be made till completion of 14 years, from the date of opening of the account
  5. The account shall mature on completion of 21 years from the date of opening of the account, provided that where the marriage of the account holder takes place before completion of such period of 21 years, the operation of the account shall not be permitted beyond the date of her marriage

Benefits

  1. Tax Exemption
    Investment in Sukanya Samriddhi Yojana scheme is exempted from Income Tax under section 80C. The scheme offers Tax Benefit under Triple E (E-E-E) regimen Principal, interest and outflow all are tax exempted.

SSY offers the highest tax-free return with sovereign guarantee and comes with the exempt-exempt-exempt   (EEE) status. The annual deposit (contributions) qualifies for Section 80C benefit and the maturity benefits are non-taxable.

  1. Withdrawal Facility
    To meet the financial requirements of the account holder for the purpose of higher education and marriage, account holder can avail partial withdrawal facility after attaining 18 years of age

How much can be deposited in the account?
The account can be opened with an initial deposit of Rs 1,000 and thereafter, any amount in multiple of Rs 100 can be deposited, subject to the condition that a minimum of Rs 1,000 will be deposited in a financial year, but the total money deposited in an account on a single occasion or on multiple occasions will not exceed Rs 1,50,000 in a financial year.

Deposits in the account can be made till the completion of 15 years, from the date of the opening of the account. For a 9-year-old, deposits have to continue till the child turns 24. Between ages 24 and 30 (when the account matures), the account keeps earning interest on the balance.

Deposit for 14 years only – You need to deposit a minimum of Rs. 1,000 and a maximum of Rs. 1,50,000 only for the first 14 years, after which you are not required to deposit any amount. Your account will keep earning the applicable interest rate for the remaining 7 years or till it gets matured on your daughter’s marriage.

An irregular account where the minimum amount has not been deposited may be regularized 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, which is currently 4%. If excess interest has been paid, it will be reversed.

How is the interest rate on deposits calculated?
The government fixes interest rates on quarterly basis based on the G-sec yields. The interest rate spread that the SSY enjoys over the G-sec rate of comparable maturity is 75 basis points.

The interest rate since its launch is as follows:
Financial Year 2014-15: 9.1%

Financial Year 2015-16: 9.2%

Financial Year 2016-17 (Q1): 8.6%

Financial Year 2016-17 (Q2): 8.6%

Financial Year 2016-17 (Q4): 8.5%

Financial Year 2017-18 (Q1): 8.4%

Financial Year 2017-18 (Q2): 8.3%

Financial Year 2017-18 (Q4): 8.1%

Interest at the rate, to be notified by the government, compounded yearly will be credited to the account till it completes 15 years.

In case the account holder opts for monthly interest, the same will be calculated on the balance in the account on completed thousands, in the balance which will be paid to the account holder and the remaining amount in fraction of thousand will continue to earn interest at the prevailing rate. For monthly interest, only the amount in thousands (rounded off) will be considered, the balance will continue earning interest at prevailing rate.

The interest will be calculated for the calendar month on the lowest balance in an account on the deposits made between the close of the 10th day and the end of the month.

Scheme Matures in 21 years or on Girl’s Marriage, whichever is earlier – The scheme gets matured on completion of 21 years from the date of opening of the account or as the girl child gets married, whichever is earlier. Please note that the girl attaining the age of 21 years has no relevance to maturity of this scheme.

Certain assumptions have been made for calculating these maturity values and those assumptions are:

  • Rate of Interest has been assumed to be 8.3% for all these 21 years.
  • Yearly contributions have been assumed to be made on April 1 every year i.e. the beginning of the financial year.
  • Monthly contributions have been assumed to be made on 1st day of every month.
  • Although it is not mandatory, a fixed amount of yearly/monthly contribution has been assumed.
  • It is also assumed that no withdrawal is made throughout these 21 years.

 

 

 

I hope these two tables help people in deciding how much amount they would like to contribute to this scheme in order to achieve their girl child’s marriage and/or higher education goals.

 

FAQs – Sukanya Samriddhi Yojana

1. If both the husband and wife deposit for their 1 daughter proportionately, Can they both claim the income tax exemption u/s 80C?

If both the husband and wife deposit for their 1 daughter proportionately, Can they both claim the income tax exemption u/s 80C? Let us assume if both invest Rs.75000 for a total of Rs.150000 P.A. which is maximum investment in Sukanya Samriddhi Account. Only one person either father or mother, who will be nominated on Sukanya Samridhi account, can avail tax exemption.

2. If the Parents have 2 daughters, can both father and mother be nominated for 2 daughters separately?

Yes. The father can be nominated as guardian for one daughter and mother can be nominated for one daughter. So the both father and mother can get tax exemption benefits in this case u/s 80C.

3. Is it possible to change the name of girl child in Sukanya account?

Yes, you just have to file an affidavit with the name change request in post office or bank wherever you have opened the account.

4. Is it possible to make changes in date of birth?

I am not sure about this although, but in case there is some genuine reason like the DOB is wrongly updated in the passbook then I think you should be able to change the DOB.

5. Can we check Sukanya Samriddhi Account amount details online?

No, only passbook updates. Currently you cannot link your minor’s account in your sbi profile, since the account is not in your name, that is what the bank told to one of our reader.

6. Sukanya Samriddhi account online payment?

Yes, it should be possible similar to fund transfer way only.

7. Sukanya Samriddhi account interest rates?

Interest rate of SSY account will change every year. You can find out about the latest interest rate for Sukanya Samriddhi Yojna account by following the post office page itself. Rate of interest 8.3% Per Annum (w.e.f 1-10-2017), calculated on yearly basis,Yearly compounded.

8. Sukanya Samriddhi account maturity rules?

Account can be closed after completion of 21 years. Normal Premature closure will be allowed after completion of 18 years/provided that girl is married.

9. Do I need to open a savings bank account to open this SSY account?

No, there is no such rules. I have seen many people has been asked by banks to open a savings account first and deposit the minimum balance before opening a SSY account.

10. Is Sukanya Samriddhi available account for US citizens?

No. I have already shared the rules about the same. You can check out the eligibility criteria of SSA above.

11. What is the age limit of Sukanya Account?

As per the new rules, you can open Sukanya account till the age of 10 years of your girl child. It was 11 years for the first year of launch.

12. What will happen in case of father/ legal guardian death?

The account will be closed furnishing the valid documents like death certificate. The maturity benefit will be transferred to the girl child

13. Is it possible to Change guardian?

No. you cannot change the name of the guardian.

14. Maximum Number of Girl Children from a parent in Sukanya Samriddhi Account (SSA) Yojana

A maximum of two girl child can be included in this scheme, in which the parents or the legal guardian can open two separate accounts for both the girl child.

15. Sometimes SBI branch and Post office wants to verify the identity of baby physically. Is it right?

It is on their procedure of Sukanya Samriddhi Account to restrict fraud or miss-presentation of guardians or parents. You have to co-operate them for all Account opening formalities.

16. Can I transfer my SSA account from one post office branch to another branch?

Yes. You can transfer the Sukanya Samriddhi account to another post office, if they are not co-operating you properly.

17. Many Sukanya Samridhi authenticated banks are not ready to open Sukanya Accounts at present and the Parents has to open account with Post office, as the age of their girl child is going to cross 10 years soon.

This year is the starting period for Sukanya Account and authenticated banks have to develop software and back-office system to start account opening of Sukanya account and by next year, almost every authenticated bank will be ready to operate Sukanya account. You need to patience for the time being and if your daughter’s age is crossing 10 years, then you can open account at post office immediately.

18. What is the Duration of the Deposits?

Deposits in SSA can be made till the girl child complete 14 years from the date of activation. However, the proceeds would get matured only after 21 years or at the time of girl child’s marriage, whichever is earlier.

19. Which installment payment is more beneficial- monthly or yearly?

If you are paying one time annual installment at the end of the financial year, then depositing monthly installment is more beneficial as the interests are calculated on monthly basis. But, if you are paying one time annual installment at the starting of the financial year, then you can also become more beneficial. It has been explained at Sukanya Samriddhi Calculator Page.

20. What are the documents required to open SSA?

You have to provide Date of birth certificate of the girl child, 2 passport size photographs and ID proof of parent or guardian.

The following documents are required:

  • Sukanya Samriddhi Account Opening Form.
  • Birth Certificate of the girl child (account beneficiary).
  • Identity Proof of the depositor (parent or legal guardian), i.e., PAN card, Aadhaar Card, Voter ID, Ration Card, Driving License, Passport.
  • Address Proof of the depositor (parent or legal guardian), i.e., Passport, Aadhaar Card, Ration Card, Electricity Bill, Telephone Bill, Driving License.
21. If I forget to invest any money in any year what will happen?

If anyhow you forget to pay installment any year then you have to pay a penalty of Rs.50 and reactivate your account and start it from where it was stopped.

22. What will happen if girl child dies unfortunately?

If such incident occurs then SSA will be closed immediately and funds will be returned to the nominee.

23. What are the minimum and maximum deposit limits in Sukanya Samriddhi Account (SSA) Yojana?

To open the SSA, an initial deposit of Rs 1,000 would be required. Thereafter, any amount in the multiple of Rs 1,000 can be deposited to the account up to a maximum of Rs 1,50,000 in a given financial year. So, to be precise:

1. The Minimum amount required per year is Rs 1,000

2. The Maximum amount per year could be Rs 1,50,000

In case, the deposits are less than Rs 1,000 in a given financial year, a fine or penalty of Rs 50 would be deducted on a per year basis. This rule would apply till the account gets fourteen years old.

24. What is the maturity or termination period of the SSAY?

The SSAY account terminates or matures after 21 years from the date of opening of the account. Once the account reaches its maturity, it stops earning interest.

25. When can we withdraw from the SSAY account and what is the maximum that can be withdrawn?

When the girl child for whom the SSAY account has been opened either passes 10th standard or turns 18, you can withdraw from the account. A maximum of 50% of the deposit made towards the account can be withdrawn to be used for higher education of the girl child.

26. What are the Benefits of Sukanya Samriddhi Account?

1. Premier scheme which is providing the highest rate of interest to its investors.

2. Any money that you pool in towards the account would be fully exempted from income tax under 80C.

3. The maturity proceeds would directly go to the girl child. This way, the accumulated amount would not be used for any other purpose by the parents or guardians. Sukanya Samriddhi Account ensures that the future of girl child is secured.

4. Anyone desirous of continuing the account even after maturity can get the term of account extended as per their wish. The account would keep getting the same rate of interest, even after extension.

5. Flexibility in terms of deposits. You can deposit any amount of money (maximum 1,50,000) whenever you have it, with no restriction on the number of times you can deposit money.

6. Last but not the least; the account can be transferred to any other location in India.

27. Any Drawbacks of Sukanya Samriddhi Account?

1. No fixed rate of interest. It would keep changing regularly. 2. The lock in period of the account is high too for many short term investors. 3. Those who have more than two daughters would not be able to open account for all of their daughters as the maximum number of girl child covered under this scheme per parents is just two.

28. List of Banks authorised to open Sukanya Samriddhi Account:

The following banks are authorised to open Sukhanya Samriddhi Account:

  • State Bank of Indi (SBI)
  • State Bank of Hyderabad (SBH)
  • State Bank of Travencore (SBT)
  • State Bank of Mysore (SBM)
  • State Bank of Patiala (SBP)
  • Syndicate Bank
  • Vijaya Bank
  • United Bank of India
  • UCO Bank
  • Punjab National Bank (PNB)
  • Oriental Bank of Commerce (OBC)
  • Indian Bank
  • Punjab & Sind Bank (PSB)
  • Indian Overseas Bank (IOB)
  • ICICI Bank
  • IDBI Bank
  • Corporation Bank
  • Dena Bank
  • Axis Bank
  • Allahabad Bank
  • Andhra Bank
  • Canara Bank
  • Central Bank of India (CBI)
  • Bank of Maharashtra (BOM)
  • Bank of Baroda (BOB)

“When setting a long-term goal, find the pace necessary to achieve it.” ~ Rickson Gracie

 

I am a CERTIFIED FINANCIAL PLANNERCM. For the moment, I have shared my experience growing up with you because it had a tremendous impact on how I do what I do.

If you have a question about your own financial situation please connect with me.  I’d be delighted to try to be of service.

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About Author

Rupakumar

Rupakumar

Mr. Pradhan has over 22 years of experience in financial services industry. He was previously working with leading Life Insurance Companies, Broking Firms, Distribution Company, Financial Planning Company and Health Insurance Company. He has cleared several NCFM modules & is also AMFI Certified. His expertise is in Comprehensive Financial Planning, Technical Analysis, Portfolio Management, Investment Advisory, Wealth Management & Business Development.

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