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Home  ❯  Finance  ❯  PPF-SSY  ❯  SSY Account

SSY Account : Features and Tax Benefits

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Sukanya Samriddhi Yojana / Scheme?

Sukanya Samriddhi Yojana (SSY) is a small saving deposit scheme for girl child, launched as a part of the "Beti Bachao Beti Padhao" campaign. Sukanya Samriddhi Yojana (Scheme) was notified by Ministry of Finance vide Notification No. G.S.R.863(E) Dated 02.12.2014. The scheme has become operational by notification of rules namely 'Sukanya Samriddhi Account Rules, 2014'. The accounts under this scheme can be opened at any post office in India doing savings bank work and authorised to open an account under the scheme or at any branch of a commercial bank authorised by the Central Government to open an account under the scheme.

What are SSY account tax and other benefits?

Investment in SSY (Sukanya Samriddhi Yojana / Scheme) Account is a good tax saving investment option for in Indian tax payers in view of the following :

Sukanya Samriddhi Yojana / Scheme Account Features

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The account may be opened by the natural or legal guardian in the name of a girl child from the birth of the girl child till she attains the age of ten years.
The account may be opened with an initial deposit of ₹ 250 ( reduced from ₹ 1000/- ) rupees and thereafter any amount in multiple of one hundred rupees may be deposited subject to the condition that a minimum of ₹ 250 ( reduced from ₹ 1000/- ) shall be deposited in a financial year.
The total money deposited in an account on a single occasion or on multiple occasions shall not exceed one lakh fifty thousand rupees in a financial year.
The deposit in the account opened may be made -

a) in cash; or
b) by cheque or demand draft drawn in favour of the postmaster of the concerned post office or the Manager of the concerned bank where the account stands and an endorsement on the back of such instrument shall be made and signed by the depositor indicating name of the account holder and account number in which the deposit is to be credited.

Where deposit is made by cheque or demand draft, the date of encashment of the cheque or demand draft shall be the date of credit to the account.

Deposits in an account may be made till completion of fourteen years, from the date of opening of the account.
An irregular account where minimum amount of ₹ 1000/- has not been deposited in a financial year may be regularised on payment of a penalty of fifty rupees per year along with the said minimum specified subscription for the year (s) of default any time till the account completes fourteen years.

(1) Interest at the rate, to be notified by the Government, compounded yearly shall be credited to the account till the account completes fourteen years; The interest rates notified under the scheme are as under:

Up to 31.03.20159.1 % p.a. 01.04.2015 to 31.03.20169.2 % p.a.
01.04.2016 to 30.09.20168.6 % p.a. 01.10.2016 to 31.03.20178.5 % p.a.
01.04.2017 to 30.06.20178.4 % p.a. 01.07.2017 to 31.12.20178.3 % p.a.
01.01.2018 to 30.09.20188.1 % p.a. 01.10.2018 to 30.06.20198.5 % p.a.
01.07.2019 to 31.03.20208.4 % p.a. 01.04.2020 onwards7.6 % p.a.

(2) In case of account holder opting for monthly interest, the same 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.

(1) The account shall be opened and operated by the natural or legal guardian of a girl child till the girl child in whose name the account has been opened, attains the age of ten years.

(2) On attaining age of ten years, the account holder that is the girl child may herself operate the account, however, deposit in the account may be made by the guardian or any other person or authority.

(1) In the event of death of the account holder, the account shall be closed immediately on production of death certificate issued by the competent authority, and the balance at the credit of the account shall be paid along with interest till the month preceding the month of premature closure of the account , to the guardian of the account holder.

(2) Where the Central Government is satisfied that operation or continuation of the account is causing undue hardship to the account holder, it may, by order, for reasons to be recorded in writing, allow pre-mature closure of the account only in cases of extreme compassionate grounds such as medical support in life-threatening diseases, death, etc.

(1) On opening an account, the depositor shall be given a pass book bearing the date of birth of the girl child, date of opening of account, account number, name and address of the account holder and the amount deposited.

(2) The pass book shall be presented to the post office or bank, as the case may be, at the time of depositing money in the account and receiving payment of interest and also at the time of final closure of the account on maturity.

The account may be transferred anywhere in India if the girl child in whose name the account stands shifts to a place other than the city or locality where the account stands.
(1) To meet the financial requirements of the account holder for the purpose of higher education and marriage, withdrawal up to fifty per cent. of the balance at the credit, at the end of preceding financial year shall be allowed.

(2) The withdrawal referred to in sub-rule (1) shall be allowed only when the account holder girl child attains the age of eighteen years.

The government has changed the withdrawal and maturity norms in the girl child savings scheme, Sukanya Samriddhi, through a notification dated March 18, 2016.

Now, partial withdrawal up to 50 per cent of the account balance will be allowed for the purpose of higher education of the account holder (the girl child), if she attains the age of eighteen years or has passed the tenth standard, whichever is earlier. Earlier, partial withdrawal was allowed only at 18 years for higher education.

Documentary proof in the form of offer of admission of the account holder in an educational institution or a fee-slip from such institution has to be submitted.

The partial withdrawal will be made as one lump sum or instalments, not exceeding one per year, for a maximum of five years.

If the educational fee is less than 50 per cent of the account balance, the partial withdrawal amount will be restricted only to the fee amount.

Premature closure of the account will continue to be allowed for marriage of the account holder, provided she is not less than eighteen years on the date of marriage. According to the new norms, no such premature closure shall be allowed before one month of the date of the marriage or after three months from marriage.

(1) The account shall mature on completion of twenty-one years from the date of opening of the account :

Provided that where the marriage of the account holder takes place before completion of such period of twenty one years, the operation of the account shall not be permitted beyond the date of her marriage :

Provided further that where the account is closed under the first proviso, the account holder shall have to give an affidavit to the effect that she is not less than eighteen years of age as on the date of closing of account.

(2) On maturity, the balance including interest outstanding in the account shall be payable to the account holder on production of withdrawal slip along with the pass book.

(3) If the account is not closed in accordance with the provisions of sub-rule (1), interest shall be payable on the balance in the account till final closure of the account.

In the budget 2014, it has been announced that the investments in Sukanya Samriddhi Scheme will be eligible for deduction u/s 80C and any payment from the scheme shall not be liable to tax.
The provisions of the Post Office Savings Bank General Rules, 1981 and the Post Office Savings Account Rules, 1981 may be applied in relation to matters for which no provision has been made in the scheme rules.

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Updated : Mar 31, 2020