In compliance of announcement by Finance Minister in his Budget Speech 2014-15 the Government of India has introduced a new scheme named “Sukanya Samridhhi Account” vide Notification No.GSR No.863(E), dated 2nd December, 2014. It has been decided to allow 9.1% rate of interest on investments in the scheme during the financial year 2014-15. This has the approval of Union Finance Minister.
Who can open this account?
The natural or legal guardian in the name of girl child may open this account. The account may be opened from the birth of a girl child to until she attains the age of 10 Yrs. However, any girl who attained 10 yrs, one year prior to the commencement of this account is also eligible. A depositor may open and operate only one account in the name of girl child.
While opening the account, the guardian must submit the birth certificate of girl child along with that his/her identity proof and residence proof.
A guardian must open maximum of two accounts. It means guardian or parents not allowed to open more than two accounts under this scheme. Exception to this rule is, third account is also allowed to open only in case of birth of twin girls as second birth or if the first birth itself results into three girl children. However, a guardian must submit the medical certificate regarding this.
How much you can deposit?
Initial investment must be with Rs.1, 000. Thereafter, in the multiplication of Rs.100. Minimum yearly investment is Rs.1, 000 and maximum investment in a year is Rs.1, 50,000 (Year means a financial year). You can deposit up to completion of the 14th year of account opened.
If you do not deposit the minimum yearly deposit of Rs.1, 000 in any year, then such account is considered as inactive. To re-activate this account, you must deposit the penalty of Rs.50 for each inactive year along with that minimum subscription of Rs.1, 000 of those years.
How to deposit to this account?
You can deposit either by cash or through cheque or DD in the name of Postmaster (in case you have account with post office) or the Manager of the concerned bank where you have account. In case of payment through cheque or DD, effective date of investment will be the date of amount realized.
Will I get income tax Benefit under Sukanya Samridhhi Account?
Is interest received under Sukanya Samridhhi Account tax free?
Yes, Interest received under Sukanya Samridhhi Account is tax free. As per Notifications in Budget 2015
How much is the interest?
Government of India will notify this on yearly base and is usually yearly compounding. However, for the financial year 2014-15 the government fixed the interest rate at 9.1%. This interest so compounded on yearly base will be credited up to the completion of 14 years.
PS: Interest under Sukanya Samridhhi Account may vary on year on year basis. Interest fo
Who can operate this account?
The account may be opened or operated by guardian until the girl child attains the age of 10 Yrs. However, once the girl child attains the age of 10 Yrs then child herself can operate the account. However, depositing will be through guardian only.
Whether premature closure allowed?
Yes, it is allowed in case of death of account holder i.e. girl child. The balance along with interest earned will be payable to guardian. Apart from this if, you are really facing financial difficulties and Government satisfy with such hardship, then it may allow premature closure. Examples of such extreme difficulties are like medical support in life-threatening diseases, death, etc.
Whether you get passbook?
You will get the passbook after opening the account. This contains all details like the child’s name, guardian, date of account opened, account number, address and the amount deposited. You must produce the passbook while depositing the account, receiving the interest and at the time of final closure.
Whether account can be transferred?
You can transfer the account anywhere in India when a girl child shifts the place, which is other than the city, where account opened.
How much withdrawal allowed?
You can withdraw the 50% of the balance at the credit, at the end of preceding financial year. This must be to meet the financial requirements of child like higher education or marriage. However, do remember that girl child must attain the minimum age of 18 years for such withdrawal.
Suppose a girl married before the completion of 21 years of account, and then such account is not allowed to operate. The account is closed once she marries.
When the account will get closed?
The account will be closed once it completes 21 years. The account holder must submit the withdrawal slip along with passbook. If account not closed after 21 years, then the balance amount will continue to earn interest until the account closed.
Features of Sukanya Samriddhi Account
- Sukanya Samriddhi account can be opened on girl child name by her biological parents of legal guardian.
- Per girl child only single account is allowed. Parents can open this account for maximum two girl child. In case of twins this facility will be extended to third child.
- Maximum age limit for opening this account is 10 years. One year relaxation available this year.
- Minimum deposit amount for this account is 1000 Rs/- and maximum is 1,50,000 Rs/- per year.
- If minimum amount is not deposited, there will be fine of 50 Rs/- every year of default.
- Money to be deposited for 14 years in this account.
- Money can be deposited by cash or cheque.
- Maturity date is 21 years from date of opening or marriage date of girl child whichever is earlier.
- Going forward expected interest rate of this account is 8.5-9% p.a.
- One can withdraw 50% money for higher study of girl child after her age of 18 years.
- Account can be opened in post office or in Authorized bank branches.
- This account can be operated by parents of child till girl attains age of 10 years. On attaining age of ten years, the account holder that is the girl child may herself operate the account.
- This account can be closed in case of death of girl child.
- Passbook facility is available with Sukanya Samriddhi account.
- The pass book shall be presented to the post office or bank at the time of depositing money in the account and receiving payment of interest and also at the time of final closure of the account on maturity.
Document required for opening Sukanya Samriddhi account:-
- Birth certificate of girl child
- Address proof
- Identity proof
Sukanya Samriddhi Account Vs PPF Account – Comparison
Lock-in period: Sukanya Samriddhi Account is locked for 21 years or at girls marriage after 18 years.
PPF account on the other hand has lock-in period of 15 years. PPF scores high in this case.
Interest Rates: Sukanya Samriddhi scheme currently offers 9.1% for this financial year. PPF on the other hand, offers around 8.7%.
Hence Sukanya Samriddhi scheme scores high in this case.
Partial withdrawals: In Sukanya Samriddhi scheme, partial withdrawal’s are allowed after 18 years of age to the tune of 50% for girl education. PPF on the other hand, partial withdrawal are allowed after 6 years with certain conditions.
Considering Indian Mind set, where in parents start accumulating funds for their daughter’s marriage and education since her birth, Sukanya Samriddhi Account is best investment option for all girl child. Hats off to Mr modi for coming up with this scheme.
Tax Benefit: Both Interest earned on PPF and Sukanya Samridhi is exempt from income tax.
Interest earned: Interet on PPF is curently at 8.7 % and on Sukanya Samridhi it is 9.1%. Hence Sukanya Samridhi is better as compared to PPF.
What is your view on Sukanya Samriddhi Girl Child Saving Scheme? Do you feel this is a good scheme promoted by Central Government. Please leave your comment below.