Sukanya Samriddhi Yojana (SSY) Scheme, Benefits, Eligibility, and Tax

The Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme launched in 2015 under the Beti Bachao Beti Padhao campaign, aimed at securing the future of the girl child in India. It encourages parents or guardians to build a fund for their daughter's education and marriage expenses. The account can be opened anytime between the birth of the girl child and her attaining 10 years of age, with deposits allowed for 15 years. The scheme offers a current interest rate of 8.2% per annum (compounded yearly) and provides tax benefits under Section 80C, along with tax exemption on interest and maturity proceeds.

Key points:

• Minimum deposit is Rs. 250, with a maximum of Rs. 1.5 lakh per financial year.
• Only girls below 10 years of age are eligible for opening an account.
• A maximum of two accounts can be opened by parents or guardians (exceptions for twins/triplets).
• Partial withdrawal (up to 50%) is allowed after the girl turns 18 for education or marriage.
• The account matures after 21 years from the date of opening.
• The scheme provides EEE (Exempt-Exempt-Exempt) status: investments, interest earned, and maturity proceeds are all tax-free.
• The account can be opened at any India Post office or authorized commercial banks, and it aims to ensure the financial security and empowerment of the girl child by facilitating savings for her future needs.

Sukanya Samriddhi Yojana (SSY) offers significant tax benefits under the Indian Income Tax Act, particularly Section 80C. Contributions made to the SSY account qualify for a tax deduction of up to Rs. 1.5 lakh per financial year, which helps reduce the taxable income of the contributor. This deduction is available under the old tax regime, not under the new tax regime.

The tax benefits under SSY work as follows:

• The amount invested in the SSY account is eligible for deduction under Section 80C, with a maximum limit of Rs. 1.5 lakh per year.
• The interest earned on the SSY deposits is fully exempt from income tax under Section 10 of the Income Tax Act.
• The maturity amount received after 21 years (principal plus interest) is also tax-free.
• Since SSY enjoys the "EEE" (Exempt-Exempt-Exempt) status, all three phases—investment, interest earned, and maturity amount—are exempt from tax.
• These features make SSY an attractive and tax-efficient savings instrument for parents or guardians to save for their daughter's education and marriage expenses while benefiting from income tax exemptions.

Step-by-step process to open a Sukanya Samriddhi Yojana (SSY) account at a Post Office:

• Visit the nearest Post Office or any Govt psu banks branch where you want to open the account.
• Obtain the SSY account opening application form available at the Post Office or download it from the official India Post website.
• Fill in the application form with necessary details such as the name and date of birth of the girl child, guardian's information, etc.
• Submit the completed application form along with the required documents:
• Birth certificate or proof of age of the girl child
• Identity proof and address proof of the parent or legal guardian (Aadhaar card, PAN card, Passport, etc.)
• Passport-size photographs of the girl child and guardian
• Pay the minimum initial deposit of Rs. 250 or more (up to Rs. 1.5 lakh per financial year) at the Post Office.
• Upon successful submission and verification of documents and payment, the Post Office will open the SSY account and issue a passbook for account tracking.
• Maintain yearly deposits to keep the account active.
• Deposits can be made at the Post Office branch physically or through standing instructions if available later.
• This account can be opened only for a girl child below 10 years of age by her parent or guardian. It offers a secure savings option with tax benefits and attractive interest rates to build a corpus for the girl’s education and marriage.

SSY account can be transferred and in some cases closed before maturity, but there are specific rules:

       Transfer of SSY Account:

• The SSY account can be transferred anywhere in India between post offices and banks, free of cost if it is due to a change of residence of the girl child or guardian. For other transfers, a fee of Rs. 100 may apply.

• Transfers require proof of new address.

  Closure of SSY Account Before Maturity:

• Premature closure is generally not allowed before 5 years from the date of account opening.
• Early closure is permitted only in special cases:
• If the girl child attains 18 years and gets married (account can be closed before maturity, but not before one month prior to marriage or after three months of marriage, with an age declaration affidavit).
• In case of the death of the account holder.
• If continuation causes undue hardship (medical emergencies or financial distress).
• If the girl becomes an NRI or PIO before maturity.
• Partial withdrawal (up to 50% of the account balance) is allowed after the girl child turns 18 for higher education or marriage expenses.
• The account matures after 21 years from the date of opening, after which full withdrawal and closure are allowed.
• In summary, transfer is quite flexible with some conditions, but closure before maturity is typically restricted to special circumstances like marriage after 18 or death.

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