In many parts of India, the birth of a girl child is not welcomed. Right from her arrival, she faces discrimination, humiliation, and oppression at every stage of life. When it comes to healthcare, education and growth opportunities, she is neglected because of her gender. Some manage to survive and foster new paths to follow. Most, however, surrender hopelessly to the sad fate assigned to them. One tool to fight this menace would be education. And because education in our country comes at a cost, it is sensible that you start as early as possible. One scheme that is tailor made for the girl child of our nation is Sukanya Samridhi Yojna.
Sukanya Samridhi Yojna or SSY is a government backed scheme launched in 2015 under the ‘Beti bachao, Beti padhao‘ initiative by GOI. This scheme helps investors to save money for the studies, marriage of the girl child. SSY offers handsome returns which beat PPF investment as well by 0.5%. So let’s quickly explore the various nitty gritty of this scheme
Who can Invest in SSY:
An SSY account can be opened by parents/ guardians of a daughter in the house who is less than 10 years old. A maximum of 2 accounts (for 2 daughters) can be opened in SSY for a family. However, there is an exception of 3 accounts in case of twin daughters.
Interest Rates:
Just like in PPF, the interest rates for SSY are not fixed and change every quarter basis the yield on government bonds. For the current quarter (Q4, FY21) it is set at 7.6%. As mentioned earlier, no matter whatever the change happens in interest rates, it will always be higher than PPF by 0.5%. Also, you can expect it to vary between 7%-8% for the years to come.
Maturity and Lock-in Period:
Maturity period for SSY is larger than PPF i.e. 21 years OR till the time your daughter gets married. However, you can contribute to the SSY account for the duration of 15 years only. For 16th to 21st year, you need not pay any money. So if you plan to start investing in SSY when your daughter is 9 years old, she will get the money once she is 30. So, it is better that you start investing as soon as you welcome your daughter in this world.
SSY amount can be withdrawn prematurely in the following cases:
- In case of death of parent/guardian
- If the daughter has encountered a life threatening disease and money is needed for her treatment.
- When the daughter has reached the age of 18 and needs money for higher education, 50% of the corpus can be withdrawn.
Minimum and Maximum investment:
Minimum investment stands at Rs. 250 per year for SSY and maximum is at 1.5L. If you fail to deposit Rs. 250 in a year, you are charged a penalty of Rs. 50/ year along with the minimum investment to reinstate your suspended account.
Taxation:
Just like PPF, SSY comes under EEE category (Exempt, Exempt, Exempt). This means that whatever you invest in SSY
(A) Can be claimed for deductions in 80C while tax filing,
(B) Income from interest on PPF is tax free and
(C) Withdrawal of amount from PPF account is also tax neutral.
Conclusion:
SSY is a very good instrument to safeguard your daughter’s future. The real magic of compounding is realized when you use this calculator to find out the maturity amount. A sum of Rs. 50,000 invested each year after your daughter turned one year old, will fetch you Rs. 21L on her 21st Birthday. This is against a total investment of 14L. We would totally recommend using the tool to realize the power of this scheme.
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