Sukanya Samriddhi Yojana Tax Benefit

• 28th Jan 2020
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Amidst the decline in the child sex ratio and rise in female foeticide, the Government of India has launched campaigns like ‘Beti Bachao Beti Padhao’. To encourage the campaign, investment options like Sukanya Samriddhi Yojana (SSY) for the parents of a girl child have been initiated. Let’s look at what is SSY, the tax benefits and features of the investment.

What Is the Sukanya Samriddhi Yojana (SSY)?

SSY is a deposit scheme started by the Government of India to accumulate funds for the education and marriage of a girl child. This program was initiated due to the decline in the sex ratio in the country. With SSY, the parents of the girl child or the guardian can collect funds for
ease in educating and bearing the expense of marriage.

Tax Benefits under Sukanya Samriddhi Account

There are several Sukanya Samriddhi Yojana tax benefits that one can avail by investing in such a financial tool.

1.A maximum of INR 1,50,000 per year can be claimed under Section 80C of the Income Tax Act

2.The interest earned on the deposited amount is tax-free

3.The amount received on maturity is also tax-free

Tax Deduction Eligibility Criteria

The parent or guardian of the girl child is eligible for opening an SSY account only if the girl is below the age of 10 years. In case the girl child is above the age of 10, the parents cannot open an account and claim SSY tax benefits.

Features of the SSY Scheme:

• Deposition limit: A minimum of INR 250 and maximum of INR 1,50,000 per year can be deposited in the SSY account
• Operator of the SSY account: After completion of 18 years of age, only the girl shall operate the account
• Eligibility Criteria: The girl child should be below the age of 10 years to be eligible for opening an SSY account
• Number of accounts: A maximum of two accounts can be opened for two girl children. A third account may be allowed in the case of twins during the first or second birth.
• In case of no deposition: If no funds have been deposited, the account can be regularised with a penalty of INR 50 per year
• Tenure of the SSY account: Deposits have to be made for 15 years only and the account matures after 21 years from the date of opening the account
• Premature withdrawal: Premature withdrawal is allowed after 5 years of maintaining the account in case the parent or guardian passes away or due to other reasons like marriage.
• Premature closure of SSY account: Premature closure is allowed in case of marriage of the girl after attaining the legal age of 18 years. Other reasons like a medical emergency or financial burden on the girl child also allows premature closure of the SSY account.