Sukanya Samriddhi Yojana is a social security scheme, which aims to bring financial independence to woman, by encouraging them invest in this scheme. The scheme addresses the issue of declining birth rate of the girl child in India and is an initiative taken up by the government, to enable parents of the girl child, build a corpus for education and marriage.
The scheme is designed for the benefit and welfare of girls and is a part of the ‘beti bachao, beti padhao’ campaign. This is one of the best savings schemes available, with an interest rate of 8.5% a year, compounded annually. The Sukanya Samriddhi Yojana also offers tax benefits, to encourage people invest in this scheme. Sukanya Samriddhi Yojana enjoys Section 80C tax benefits.
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Listed below are some of the important documents that must be submitted by the parents of the girl child, to open Sukanya Samriddhi Yojana Account:
Listed below are the eligibility norms required to open a Sukanya Samriddhi Yojana account:
The rate of interest offered on this scheme is currently among the highest. The Sukanya Samriddhi Scheme offers an interest rate of 8.5% a year for the current financial year 2018-19. When the scheme is compared to other saving schemes, the interest rate offered is among the highest.
The interest rate is subject to changes and the government revises the rates and declares them at the beginning of the financial year. The interest is compounded on a yearly basis and will be credited on a yearly basis. The rate of interest will accrue on a monthly basis, on the lowest balance between 5th and the last day of the month. A yearly fee of Rs 250 must be paid by the accountholder, to stop the account getting deactivated.
There are additional benefits offered by this scheme other than interest rate. In order to encourage the parents of the girl child make an investment, the government is also offering tax benefits.
The scheme offers tax benefits under Section 80C of the Income Tax Act, 1961. The accrued interest across the tenure of the Sukanya Samriddhi Yojana savings scheme, as well as the maturity amount is exempt from tax.
Sukanya Samriddhi Yojana matures when the girl child attains 21 years or on her marriage. (The legal age of marriage for girls is 18 years). However, contributions only need to be made for 15 years. Thereafter, the account continues to earn interest until maturity even if no deposits are made.
Lock-in period is one of the key benefits of this scheme. The account cannot be operated after the marriage of the girl child. In case of premature withdrawal, the parents of the girl child get the amount only after she attains the age of 18.
Withdrawal can also be made for funding education of the girl child. Only 50% of the account balance can be withdrawn in case of premature withdrawal at the end of the previous financial year. The account holder can deposit money in the account for 14 years from the date of opening the account. Moreover, the maturity period of the account is 21 years from the date of opening the account.
On maturity of the Sukanya Samriddhi Yojana savings scheme, the total amount accumulated is given to the girl child. She gets the principal and interest accrued under the scheme. The amount cannot be withdrawn and used for any other purpose. It is directly payable to the girl child either for higher education or marriage.
The aim of the Sukanya Samriddhi Yojana savings scheme is to empower the girl child, by ensuring financial independence.
The government has offered certain tax benefits to the account holders under this scheme. The tax benefits are provided to encourage parents under the ‘beti bachao beti padhao’ scheme and also to promote the scheme:
If the accountholder or the legal guardian fails to pay the minimum investment amount i.e. Rs 1,000 in a financial year, then the account will be deactivated. It can be revived by paying a penalty of Rs 50 for the year the payment was missed.
At the end of the year, a payment of Rs 50 has to be made, over the minimum annual deposit towards the Sukanya Samriddhi Yojana savings scheme, as confirmation for reviving the account.
Currently Sukanya Samriddhi Yojana savings scheme is one of the best investment schemes. The scheme serves as a child insurance plan to secure the future of the girl child and enable her fulfill her dreams or even help the parent fund education and marriage. However, the scheme has its restrictions as these cannot be availed if you have no girl child. Under the Sukanya Samriddhi Scheme, the parents of the girl child are eligible to hold two accounts simultaneously, for two girl children.
A maximum of three accounts can be opened in case the parents have twins along with the second girl child, thus providing an avenue to build sufficient corpus for the bright future of the girl child with minimum investment.
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