No doubt, the future of any nation rests on the shoulders of the young ones. The youth are expected to bring developmental stride into the country if giving the opportunity to advance in career and education. India is one such country with a lot of youthful potentials. In India, the girl child has had it so bad due to their gender. They have been denied their basic human rights such as education.
In a bid to address the perceived inequality between the girl and boy child, the Indian government set up the Sukanya Samriddhi Scheme. The Scheme was launched by Prime Minister, Narendra Modi, with a view to bridging the financial gap which had prevented a lot of girl children from accessing education and then becoming useful to the society.
The Sukanya Samriddhi Scheme is a saving scheme initiated by the Modi’s administration to provide for the girl child’s education and Marriage needs. The scheme is also designed to offer the girl child an opportunity to pursue their dreams. Since the launched of the scheme, it has empowered a lot of the girl children and offers a host of other benefits to both the girl child and their parents.
The Sukanya Samriddhi Scheme is designed in such a way that it does not become a burden to the depositors. The depositors under this scheme are tax exempted so that it would not tell on their savings. One major advantage of this scheme is that depositors can lodge as little as Rs. 250. Although the initial minimum amount was Rs. 1000, but the government in their wisdom revised the amount down to the present Rs. 250. Also, between July and September, the interest rate stood at 8.1%.
In view of the numerous benefits of the Sukanya Samriddhi saving account (SSA), we will take a look at the SSA, its features, objectives, authorized banks to open the account, and how to open the account. Sit back and relax while we set the ball rolling.
WHAT IS SUKANYA SAMRIDDHI SAVING ACCOUNT?
The Sukanya Samriddhi Account is a saving scheme launched by the Prime Minister of India, Narendra Modi. The scheme is part of the ‘Beti Bachao Beti Padhao’ campaign geared towards the training and empowerment of the girl child. The objective of the Sukanya Samriddhi Scheme is to provide a dual carriage wealth for the girl child- Education and Marriage. It has an interest rate of 8.1%. Simply put, the SSSA is a long-term saving plan designed to meet the education and marriage expenses of the Indian girl child.
BACKGROUND OF THE SUKANYA SAMRIDDHI SCHEME-
In India, having a girl child is like a curse due to the imminent financial burden to the parent. This issue is prevalence, especially in Northern India. It may not be unconnected to the dowry system and some outdated social norms. However, through the Sukanya Samriddhi Scheme, the government is educating India parent that a girl child is not a financial burden if adequate financial planning is in place before she grows into an adult.
FEATURES OF SUKANY SAMRIDDHI SCHEME-
The Sukanya Samriddhi Scheme is designed in such a way that it does not become a burden to the depositors. The depositors under this scheme are tax exempted so that it would not tell on their Finance. Depositors on this scheme are either the girl child’s direct parent or legal guardian. Depositors can lodge as little as Rs. 250. Although the initial minimum amount was Rs. 1000, but the government in their wisdom revised the amount down to the present Rs. 250. The following are the other major features of the Sukanya Samriddhi Scheme:
- An investment in the Sukanya Samriddhi Scheme is eligible for income tax exemption as clearly captured by Section 80C of the Income Tax Act.
- All the interest accrued to this scheme are free from tax.
- Upon maturity of the scheme, the wealth created for the girl child is also tax-free
- The interest rate is 8.1% and calculated on a yearly basis.
- The interest rate is declared every year
- Minimum amount to deposit is Rs. 250
- The maximum amount is Rs. 1,50,000 in a year
- There is no limit on the number of deposit made by parents
- The girl child’s parent will open the SSA on behalf of the child
- The parent or a legal guardian can open the account
- The parent must present the child’s birth certificate before the account can be opened
- The parent will provide a copy of their ID and a proof of address.
- Only one account can be opened in the name of a girl child
- A guardian or parent can open up to two accounts for two different girl children
- The maximum age of a girl child to hold an SSA is 10 years.
- At least INR 250 must be paid into the SSA in a financial year, otherwise, the account would become invalid. To reopen the account, a minimum deposit of INR 50 must be paid as a penalty.
- A partial withdrawal of up to 50% (of the preceding year’s balance) can be taken from the account once the account holder (girl child) attains 18 years of age to take care of the girl’s education expenses.
- Once the girl child attains 21 years, the SSA can be closed.
- Once the account is closed, the account holder (girl child) will receive the current balance alongside all the interest accrued on the account.
- If the SSA is still active after maturity, it would still continue to earn interest from time to time
- A premature closure of the account is allowed once the girl is married or attains the age of 18.
ADVANTAGES OF SUKANYA SAMRIDDHI SCHEME
The Sukanya Samriddhi Scheme is a laudable scheme. The Scheme is inherently laden with so many benefits both to the depositors and the beneficiaries. Here the beneficiary is the girl child, while the depositor is either the girl child’s biological parent or legal guardian. That said; let’s take a look at the benefits that come with the operation of the SSA:
- The SSA comes with a high interest rate compared to the PPF scheme.
- The Scheme enjoy an income tax exemption
- The scheme is flexible in that there is no limit to the number of times deposit can be made.
- There is also no limit to the amount to be deposited. For instance, Rs. 250 will be accepted as deposit.
- The SSA is transferable to any state within India
- Interest accrued in the SSA account will be paid even after the maturity period. If the account is not closed, interest would still be paid. Unlike other schemes in the country, interest is usually not paid once the deposit matures.
- The interest and the current balance in the SSA will be paid to the account holder when the account matures. This gives the account holder (girl child) financial freedom for her get quality education to University level.
TAX BENEFITS OPERATING AN SUKANYA SAMRIDDHI ACCOUNT-
In no particular order, the Sukanya Samriddhi Scheme offers a lot of tax benefits to the account holders. Let’s take a look at the major benefits that come with the operation of this account
- In line with Section 80C of the Income Tax Act, any investment under the SSA will enjoy tax deductions. The maximum deduction as far as this scheme is concerned is Rs 1.5 lakh.
- The interest accrues on the SSA is usually compounded and then paid to the account holders on an annual basis.
- The accrued interest is tax exempted, making it grow faster
- On closing the SSA, the invested amount can be withdrawn
- Once the SSA matures, holders of the account can also withdraw
- Both the Account beneficiary and the depositor will enjoy tax exemption.
CRITERIA FOR TAX DEDUCTIONS
Section 80C of the Income Tax Act only permits one depositor to contribute money to the SSA. The contributor can either be a girl child’s biological parent or her adopted parents. Even though a contribution to the account is liable for tax deductions, the law clearly states that only one depositor can claim tax exemption. What this means is that either the biological parent or adopted parent can claim tax exemption and not both.
The Sukanya Samriddhi Scheme is a viable scheme which will see the girl child through school and hopefully propel her to enjoy a brighter future.
AUTHORIZED BANKS TO OPEN A SUKANYA SAMRIDDHI ACCOUNT
The Reserve Bank of India on the 11th of March 2015, released a list of authorized banks to coordinate the opening of the Sukanya Samriddhi Account. It is important to mention here that the same banks that were authorized to handle the opening of PPF account are also the same sets of banks authorized to handle the opening of the SSA.
The lists of banks approved by the RBI in no particular order are:
- State Bank of India
- State Bank of Patiala
- State Bank of Bikaner & Jaipur
- State Bank of Travancore
- State Bank of Hyderabad
- State Bank of Mysore
- Andhra Bank
- Allahabad Bank
- Bank of Baroda
- Bank of India
- Punjab & Sind Bank
- Bank of Maharashtra
- Canara Bank
- Central Bank of India
- Corporation Bank
- Dena Bank
- Indian Bank
- Indian Overseas Bank
- Punjab National Bank
- Syndicate Bank
- UCO Bank
- Oriental Bank of Commerce
- Union Bank of India
- United Bank of India
- Vijaya Bank
- Axis Bank Ltd.
- ICICI Bank Ltd.
- IDBI Bank Ltd.
HOW TO OPEN A SUKANYA SAMRIDDHI ACCOUNT FOR YOUR GIRL CHILD-
Parents of a girl child can open a Sukanya Samriddhi Account at any branch of the above-listed commercial banks or an authorized post office branch. Parents are advised to proceed to any of the banks to obtain the application form. The following documents are required alongside the application form:
- The child’s birth certificate
- Identity proof of the parents such as ration card, passport, PAN Card, and drivers’ license
- Address proof of the parents such as electricity bill, telephone bill, ration card, passport or drivers’ license
- Fill the application form correctly and submit it with the above documents.