Centre has raised the interest rate for Sukanya Samriddhi Account by 20 bps, to 8.2 per cent from 8 per cent, for the January to March 2024 quarter. The hike in interest rates was announced as part of the latest small savings schemes announced for the financial year 2023-24.
Sukanya Samriddhi Yojana is a government-run scheme helping parents in securing their daughter's future, whether be it for education, marriage related or other expenses. An SSY account must be opened before a girl reaches 10 years of age.
Investments in SSY can range from Rs 250 to a maximum of Rs 1.5 lakh per year in the Sukanya Samriddhi Yojana account. One can apply for SSY through Post Offices or the branches of Public Sector Banks and three Private Sector Banks viz. HDFC Bank, Axis Bank, and ICICI Bank, as per the official website.
To apply, visit these offices, fill out the application form, and submit the necessary documents including the birth certificate of daughter, photo ID of the guardian, and other KYC proofs. Pay the first deposit in cash, check, or demand draft. The payment can range between Rs.250 and Rs. 1.5 lakh.
The bank or post office will process the application, and you will receive a passbook upon activation of your SSY account. Required documents include birth certificate, photo ID, address proof of the parent or guardian, KYC proofs like PAN and Voter ID, SSY account opening form, and possibly other requested documents or a medical certificate for multiple births.
The tenure till maturity is 21 years. But deposits can be made over 15 years, and the account accrues interest for 21 years (its maturity period). Contributions over time can yield substantial returns; for example, a yearly deposit of Rs 6,000, ie Rs 500 per month for 15 years would sum up to Rs 90,000 at the end of 15 years. This could yield Rs 4,70,993 at maturity in 21 years.
SSY stands out with its higher interest rate compared to other schemes, such as PPF or bank fixed deposits, offering a favourable option for securing a girl's future. However, investors need to be mindful that the fund will be locked for 21 years. Additionally, contributions, interest earned, and maturity amounts are all exempt from tax under Section 80C of the Income Tax Act.
The account matures after 21 years but can close earlier for the account holder's education purposes. Partial premature withdrawal, up to 50 per cent, is permitted for the account holder's education post reaching 18 years or passing the tenth standard.
Failure to make deposits in any year will result in the account being 'discontinued.' To reactivate it, a minimum payment of Rs 250 per defaulted year and a penalty of Rs 50 per inactive year is warranted.
