How Sukanya Samruddhi Yojana Can Help Fulfil Your Daughter’s Future Needs

Making provisions for these major life events requires advance planning and strategic investing.

To encourage families to invest in the bright future of their daughters, the Government of India launched the Sukanya Samriddhi Yojana (SSY) in 2015.

In this article, we'll explore the key benefits, eligibility criteria, and the current interest rates of this scheme, and discuss how it can help support your daughter's future needs.

Want to Make Your Money Work While You Sleep?

Talk to Our Investment Advisors Today!

Schedule a First Consultation Call Right Now

What Is the Sukanya Samriddhi Yojana?

Sukanya Samriddhi Yojana is a government-backed small savings scheme designed to help parents build a financial corpus for their daughter's education and marriage.

The scheme is a part of the Beti Bachao, Beti Padhao campaign launched in 2015, which aims to raise awareness and improve the quality of welfare services intended for girls across India.

January 22, 2025, marked a decade of Sukanya Samriddhi Yojana, and its widespread impact is evident through the opening of over 4.1 crore accounts (as of November 2024).

Offering guaranteed returns, tax benefits, and the security of a sovereign guarantee, SSY is one of the prudent investment avenues available today.

Who Is Eligible to Open a Sukanya Samriddhi Account?

Parents or legal guardians of a girl child can open an SSY account in her name, anytime between her birth and the age of ten. The scheme is exclusively available to girls residing in India.

Each girl child is permitted only one SSY account, and families are allowed a maximum of two accounts. However, an exception is made in cases where twins or triplets are born.

The minimum initial deposit required to open an SSY account is Rs 250, and subsequent contributions can be made in multiples of Rs 50, as long as a minimum of Rs 250 is deposited in a financial year.

The maximum yearly deposit limit is Rs 1.5 lakh, and any excess contributions will not earn interest and will be returned.

There are no limits on the number of deposits you can make in a month or in a financial year. However, if the minimum deposit is not maintained, a penalty of Rs 50 is charged to keep the account active.

Deposits can be made for up to 15 years from the account opening date, although the scheme has a lock-in period of 21 years.

While no further deposits are allowed after the 15-year period, the account continues to accrue interest for the next six years, reaching maturity at 21 years.

Until the girl child reaches 18 years of age, the account is managed by the parent or guardian, ensuring that they can oversee the investments effectively.

Once the account holder reaches adulthood, she can take control of the account by submitting the necessary documents.

If the account holder gets married before the 21-year maturity period (provided she is at least 18 years old), the account will be closed and can no longer be operated post-marriage.

Current Interest Rate for Sukanya Samriddhi Yojana

The current annual rate of interest for the Sukanya Samriddhi Yojana is set at 8.2% p.a. The rate is reviewed every quarter and remains fixed once set, based on the performance of government securities.

The SSY interest rates are reviewed and adjusted by the government every three months. You can estimate the potential maturity amount using various online Sukanya Samriddhi Yojana calculators that take the latest interest rates into account.

Example of Interest Rate Calculation

Suppose you decide to invest Rs 20,000 every year for your 5-year-old daughter, with the current interest rate of 8.2% per annum. The starting year is 2025, and you continue investing for the next 15 years.

The scheme has a maturity period of 21 years, meaning the interest will continue to accrue on your deposited amount for an additional 6 years after the 15-year investment period.

After 21 years, the total maturity value will be approximately Rs 9,23,677, with a total interest of around Rs 6,23,677. The total deposit will amount to Rs 3,00,000.

Here's the complete breakdown:

Benefits of Investing in the Sukanya Samriddhi Yojana

1. Attractive Rates of Interest

The scheme offers competitive interest rates as compared to other similar small savings schemes. Given that the scheme is designed for long-term investment, compounding interest significantly boosts the overall returns, helping to build a substantial corpus for your daughter's future.

2. Manageable Minimal Deposit

The minimum annual deposit of Rs 250 provides financial flexibility, allowing the account to remain active even if the maximum contribution isn't feasible for a particular financial year.

3. Tax Benefits

The Sukanya Samriddhi Yojana offers significant tax advantages as it falls under the EEE (Exempt-Exempt-Exempt) category of the Income Tax Act, 1961.

Investments made in the scheme are eligible for tax deductions under Section 80C, subject to the upper limit of Rs 1.5 lakh.

Additionally, both the interest accrued, and the maturity amount are exempt from taxation, making it an ideal option for saving taxes while building a financial corpus for your daughter's future.

4. Easily Transferable

The scheme account can be easily transferred to another bank or post office if the account holder changes their residence or location. This enhances the convenience of accessing the account from any location, making it particularly beneficial for parents with transferable jobs.

5. Lock-in Period

The 21-year lock-in period from the account's opening ensures that the funds are preserved for the girl child's future and not used for personal financial needs.

However, a one-time withdrawal (up to 50% of the account balance) is permitted when the girl turns 18 or has passed the 10th standard, usually to cover higher education expenses.

How to Open a Sukanya Samriddhi Account?

An SSY account can be opened at any post office or participating public or private bank. At present, there is no provision to open an SSY account online.

To open a Sukanya Samriddhi Yojana account for your daughter, you will need the following documents:

• Sukanya Samriddhi account opening form (available online on the websites of the RBI, the Indian Post Office, and the participating public or private banks)

• Birth certificate of the girl child

• Identity and address proof (as per the RBI KYC guidelines)

• Any additional documentation requested by the bank or the post office

Sukanya Samriddhi Account Early Withdrawal/Closure Rules

The account holder can apply for a withdrawal of up to 50% of the balance at the end of the preceding financial year, specifically for educational expenses. This is allowed once the account holder reaches the age of 18 or completes the 10th standard, whichever comes first.

To initiate the withdrawal, the account holder must submit an application along with the necessary documents. These include the confirmed admission offer or a fee slip from the educational institution, along with details of the financial requirements.

Withdrawals can be made as a lump sum or in instalments, with a maximum of one withdrawal per year for up to five years. The amount must not exceed the actual fees and charges as stated in the admission offer or fee slip.

Early closure is permitted in specific circumstances, such as when the account holder has reached 18 and is getting married before the maturity period ends.

The application form can be submitted one month prior to the wedding or within 3 months after the wedding, along with proof of age and marriage.

Other situations where an SSY account premature closure is allowed include:

• If the girl child moves abroad and becomes a Non-Resident Indian (NRI). The relevant authorities should be notified within 1 month of the date of change in the citizenship status.

• In the unfortunate event of the girl child's passing. The remaining balance will be transferred to the account of the parent/guardian upon submission of necessary documents, such as the death certificate.

• On extreme compassionate grounds, such as the account holder facing life-threatening medical conditions or the death of the parent/guardian. However, premature closure cannot be made within the first five years of the account's inception.

To Conclude...

Investing in the Sukanya Samriddhi Yojana can be beneficial for those who prefer a long-term investment with assured returns and tax benefits.

However, before investing, consider the potential limitations, such as restrictions on the number of accounts, the lack of online facilities for opening and operating the account, and the possibility of interest rate cuts, as the government reviews them periodically.

Use online Sukanya Samriddhi Yojana calculators available on the websites of participating banks to estimate potential returns and make informed decisions before committing.

Happy investing!

We are on Telegram! Join thousands of like-minded investors and our editors right now.

Hiral Bhuta is a Investment Consultant & Principal Officer. She is a seasoned professional in the financial services industry, currently serving as an Investment Advisor and Financial Planner at PersonalFN. With her expertise, she plays a pivotal role as the Principal Officer appointed under SEBI's amended IA Regulation. Hiral holds distinguished certifications such as Certified Financial Planner (CFP) and NISM XA & XB, complemented by a post-graduate degree in commerce (M. Com). Her primary areas of focus encompass financial planning, investment advisory, and wealth management, where she leverages her knowledge and skills to provide tailored solutions to clients. With a cumulative experience spanning five years, Hiral brings a wealth of expertise and insight to her role at PersonalFN, ensuring clients receive expert guidance and support in navigating their financial goals.
 

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.