Our Prime Minister Mr Narendra Modi on 22nd January 2015 launched Sukanya Samriddhi Account as a part of the Beti Bachao Beti Padhao campaign. This account can be opened in any post office or authorized branches of a commercial banks.
On this occasion our Prime Minister handed over bank account details to five girls under the ‘Sukanya Samriddhi Yojna’ (girl child prosperity scheme).
In this article we will be looking into tax benefits and specific features of Sukanya Samriddhi Account scheme.
Who can open Sukanya Samriddhi Account
Sukanya Samriddhi Account can be opened by a natural person or legal guardian in the name of a girl child from the birth of the child till she attains the age of 10 years.
Girl Childs who had attained the age of 10 years, one year prior to the commencement of these rules shall also be eligible for opening Sukanya Samriddhi Account.
Only one account in the name of a girl child is allowed up to two girl child. This means, one legal guardian or natural person can open Sukanya Samriddhi Account only for two girl child, one account each.
However, in the event of birth of twin girls as second birth or if the first birth itself results into three girl child then the natural person or legal guardian will be allowed to open third Sukanya Samriddhi Account by producing a certificate from the competent medical authorities where the birth of such twins or triple girl child takes place.
Guardian means either father or mother or where neither parent is alive or is incapable of acting as a guardian then a person entitled under the law for the time being in force to have the care of the property of the minor.
Deposit restrictions and Documents required for Sukanya Samriddhi Account
To open, birth certificate of the girl child along with identity proof and address proof is required to be submitted to the bank or post office where you want to open Sukanya Samriddhi Account.
Sukanya Samriddhi Account can be opened with initial deposit of Rs 1000. Thereafter, money can be deposited in multiplication of Rs 100 subjects to a minimum of Rs 1000 shall be deposited in a financial year.
Total money deposited into such account shall not exceed Rs 150000 on a single occasion or on multiple occasions in a financial year. This means, Money will be deposited in multiplication of Rs 100 subject to a minimum amount of Rs 1000 per year and up to a maximum amount of Rs 150000 per year.
From the date of opening, deposit to Sukanya Samriddhi Account may be made till the completion of 14 Years.
If in case minimum amount as specified above has not been deposited in Sukanya Samriddhi Account then it can be regularized on payment of a penalty of Rs 50 per year along with the minimum specified subscription amount not paid or for the years of default.
Deposit can be made in cash or cheque or demand draft. If deposits are in cheque or demand draft then date of encashment shall be the date of credit to the account.
The natural person or legal guardian of a girl child shall open and operate the account till the girl child attains the age of 10 years. After attaining age of 10 years, the girl child may herself operate the account. However, the guardian or the natural person may deposit into the account.
Interest rate on deposits to Sukanya Samriddhi Account
At present Sukanya Samriddhi Account is allowed 9.1% rate of interest on investments during the financial year 2014-2015. Interest rates for this purpose will be notified yearly basis or from time to time whenever applicable.
If you have opted for monthly interest then interest on deposits to Sukanya Samriddhi Account shall be calculated on the balance in the account on completed thousands, in the balance which shall be paid to the account holder and the remaining amount in fraction of thousand will continue to earn interest at the prevailing rate.
Tax benefits on deposits to Sukanya Samriddhi Account
Central government vide notification dated 21st January 2015 has specifies the Sukanya Samriddhi account for the purpose of Section 80C of income tax act. As per the notification, with effect from 21st January 2015, deposit into Sukanya Samriddhi Account can be claimed as tax deduction under section 80C of income tax act.
This means investments in Sukanya Samriddhi Account along with other eligible investments can now be claimed as tax deduction up to a maximum limit of Rs 150000 for the financial year 2014-2015.
In Budget 2015, government has exempted the interest amount that account holder receives from their deposits in Sukanya Samriddhi Account. As the law stands today, from 1st of April 2015 (assessment year 2016-2017) onwards interest received from Sukanya Samriddhi Account will be exempted from tax.
Also Read: Important tax provisions in budget 2015
Closure, withdrawal and transfer
In the event of death of the girl child, the account in her name shall be closed on production of death certificate. Balance amount laying in the account shall be paid along with interest till the month preceding of premature closure to the guardian of the girl child.
Sukanya Samriddhi Account can be transferred anywhere in India if the girl child in whose name the account is opened stands shifted to a place other than the city or locality where the account stands.
Withdrawal up to 50% of the balance at the credit, at the end of preceding financial year is allowed to meet the financial requirements of the account holder for the purpose of higher education and marriage. However, such withdrawal shall be allowed only when the account holder girl child attains the age of 18 years.
The account shall mature on completion of 21 years from the date of opening. However, where the marriage of the account holder takes place before completion of such period of 21 years, the operation of the account shall not be permitted beyond the date of her marriage.
On maturity, the balance including interest outstanding in the account shall be payable to the account holder i.e. the girl child in whose name Sukanya Samriddhi Account is opened.
If the account is not closed then interest shall be payable on the balance amount till the final closure.
Features of Sukanya Samriddhi Account Scheme
|Who is eligible to open Sukanay Samriddhi Account||Girl child|
|Age limit||Girl child must be between 0-10 years of age|
|Where to open||Post office or in any branch of authorised commercial bank|
|How many accounts can be opened per girl child||Only One|
|Is there any restriction on number of girl child||Yes, you can open Sukanya Samriddhi Account in the name of 2 girl child.However, in the event of birth of twin girls as second birth or if the first birth itself results into three girl child then the natural person or legal guardian will be allowed to open third Sukanya Samriddhi Account|
|Interest rate||9.1% per annum|
|Minimum contribution limit||Rs 1000 per year|
|Maximum contribution limit||Rs 150000 per year|
|Tax benefits||Deposits to Sukanya Samriddhi Account eligible for Section 80C deduction|
|Is interest on Deposits in Sukanya Samridhi Account taxable||No, Its exempted from 1st of April 2015 onward.|
|Is partial Withdrawal permitted||Yes, after 18 years|
|What is the maturity period||21 Year|
|Am I required to invest up to 21 years||Scheme allows you to invest from the date of A/c opening till the completion of 14 Years.|