Sukanya Samriddhi Yojana: Important watchouts before you invest – Product Review

Sukanya Samriddhi Yojana: Important watchouts before you invest – Product  Review
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Sukanya Samriddhi Account (SSA) is officially launched by honorable Prime Minister Narendra Modi on January 22, 2015 as a part of “Beti Bachao- Beti Padhao (BBB)” Initiative. Sukanya Samriddhi Account is a special scheme for girl child. This scheme is specially design for girl’s higher education or marriage needs.

In compliance of announcement made by Finance Minister Arun Jaitley in his Budget Speech 2014-15 the Government of India has introduced a new scheme named “Sukanya  Samriddhi 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.

Sukanya Samriddhi Account is third initiative taken by Narendra Modi lead BJP government in short span of time. Prior to this two more successful initiatives “Jan dhan Yojana” and “UAN number of PF” is already executed by this government.

Let’s review Sukanya Samriddhi Account special saving scheme in detail.

Sukanya Samriddhi Account Features

Opening account

  • Sukanya Samriddhi account can be opened on the name of a minor girl child by her parents till she attains 10 years of age.
  • Only single account can be opened in the name of girl child after furnishing original birth certificate.
  • This account can be opened at post office or at public sector banks authorized by the government of India.


Deposit Rules

  • Minimum deposit amount for this account is 1000 Rs/- per year. Maximum amount deposited for this account is 1, 50,000 Rs/- in a year.
  • Deposit shall be made by cheque, DD or Cash. If minimum amount of 1000 Rs/- is not deposited every year penalty of 50 Rs/- is levied.


Rate of Interest

  • For the current financial year 2015-16 highest interest rate 9.2% will be applicable on Sukanya Samriddhi Account.
  • Method of calculating rate of interest will be similar to PPF, it will be compounded annually.
  • Every year government will announce interest rate for this scheme.


Premature Withdrawal

  • Sukanya Samriddhi Account will mature after 21 years of opening account.
  • Premature withdrawal of 50% is allowed for higher education or marriage purpose only when the account holder girl child attains the age of 18 years.


Term Period

  • Deposit to be made in to this account till the end of 14 years from the year of opening this account.

Tax Benefit

  • The amount that is deposited under Sukanay Samriddhi Account will be eligible for income tax exemption under section 80C (Up to 1.5 Lakh).
  • Interest amount earned on this account and withdrawal made from this account is tax free.
  • Maturity amount of SSA is also tax free.

PPF account or Sukanya Samriddhi Account (SSA)

Basic difference between PPF account and Sukanya Samriddhi Account is rate of interest.  Current rate of interest payable on PPF (up to 2015) is 8.7%, while on SSA interest rate payable is 9.2%.

My Opinion on Sukanya Samriddhi Account

Intention behind Sukanya Samriddhi Account is very good, but this scheme is more or less copy of PPF scheme. With ever increasing inflation saving for child education and marriage is not child’s play. Cost of education is rising much faster than inflation. Fixed investment return option like this may not help you create big corpus.

Best way to create big corpus for child education and marriage as discussed earlier is equity-oriented investment options like mutual funds or shares.  It is advisable to allocate only small portion of your saving towards debt scheme like Sukanya Samriddhi Scheme.

The other tax saving options which have defined rate of interest are – Five year Bank Fixed Deposits and National Savings Certificates (NSC). The rate of interest offered under these options is lower than the interest rate offered for Sukanya Samriddhi deposit scheme. (The rate of interest on NSC Five year deposit is 8.50% and 10 year NSC deposit is 8.8%. The best rates of interest offered on 5 year Tax saving Bank deposits are 9.10% by DCB bank and 9% by banks like Dena, Dhanalakshmi, Indian overseas and Lakshmi Vilas). The interest income earned under these options is taxable.

The other fixed income options like Bank Fixed deposits, Bank Recurring Deposits etc., do not have any income tax exemptions or benefits. So, there is no point in comparing Sukanya Samriddhi Yojana scheme with these options.

Hope you agree with my thoughts…

Do share your views on above….

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