Sukanya Samriddhi Account with 80C benefits – Special scheme for girl child
POSTED BY ON January 29, 2015 COMMENTS (353)
You must have heard about “Beti Bachao Beti Padhao” initiative recently on television advertisements. As part of it, the government has recently announced a scheme called “SUKANYA SAMRIDDHI ACCOUNT”, which is mainly for saving money for the girl child.
This is a welcome move because a lot of investors will get some extra incentive to save in the name of their girl child once they are born from a long-term perspective. You can see the exact PDF containing all information.
Let me share with you all the benefits and features of this scheme in details.
What is Sukanya Samriddhi Account?
Sukanya Samriddhi Account (SSA) is an investment scheme which can be opened for a girl child. The scheme is specially designed for girls higher education or marriage needs and should be opened by her parents or legal guardian(in case parents are missing).
One can deposit a maximum of Rs 1,50,000 per financial year (Apr-Mar) and the yearly interest rate in this account is 9.1% compounded on a yearly basis. Note that this interest rate is not fixed and will be notified on a yearly basis or from time to time whenever applicable, very much like PPF.
The best part is that the investment in this account is exempted from income tax under sec 80C.
Amount of Deposit and Frequency
The minimum amount one has to deposit per year is Rs 1,000 and the maximum amount is Rs 1,50,000. There is no limit of the number of transactions in a year. When you open the account for the first time, you have to deposit a minimum of Rs 1,000 and above that any multiple of Rs 100 (like Rs 1200 or Rs 1400, but not Rs 1,450).
You also need to make sure that you do not skip your payments each year, otherwise a penalty of Rs. 50 will be levied for each year of non-contribution. At this point in time, it’s not clear if NRI can invest in these schemes or not. I don’t see any wording in the official document published by govt. If someone has clarity on that, please share it in the comments section.
This account can be opened before the girl attains 10 yr of age. So the moment the girl child is born, you can open this account in her name or wait for some years and open it later, but once the age of 10 is reached, one can’t open a new account for the girl child.
You can deposit the money in the account only for the 14 yr period, from the date of opening, so the best thing is to open the account early itself so that you get the maximum window of 14 yr to accumulate the money.
You will need following documents to open this Sukanya Samriddhi account.
- Birth certificate of the girl child
- Address proof
- Identity proof
One can open only maximum of 1 account per girl child and in total only 2 accounts can be opened by parents for 2 girls (one for each), but in case the second birth has resulted in twins, then 3 accounts are allowed. You can’t open multiple accounts for the same child as you do in saving bank account.
Where can you open this account?
As per the notification, this account can be opened either in a Post Office or any public sector bank. You will get a passbook under this scheme which will have details of the account holder (daughter name) along with other information like date of opening etc like it happens in the case of PPF account. Also, the account can be transferred to any city in India later if you wish.
As this has been recently announced, I believe the banks and post office must be in the implementation mode right now and must be training their staff on this.
So if you immediately visit them to open an account, you might face problems as the staff might not be 100% clear of rules. So I suggest to wait for 2-3 months and let the whole thing settle down.
Maturity and Premature Withdrawal
Sukanya Samriddhi Account will get matured after 21 yrs from the date of opening the account or before the marriage of the girl, whichever is earlier. The good part is that if parents want to close the account before 21 years for marriage purpose, they have to give an affidavit that the girl has reached at least 18 yr of age so that one can’t use it for child marriage (before 18 yr).
One can also partially withdraw 50% of the balance amount after the girl reaches 18 years of age, for the educational purpose and rest has to be left in the account so that it can be used for the marriage purpose.
Also in the worst case, if there is the death of the girl child, the account will have to be closed and the money will be paid to the legal heirs (mostly parents). Apart from that, the account can still be closed much before in cases of extreme compassionate grounds such as medical support in life threatening diseases. death, etc.
There is no loan facility under this scheme.
How can you deposit the money under this scheme?
You can make the payment by Cash, Cheque or demand draft by going to the post office or the bank where you have opened the account.
Unlike PPF or Saving bank account, you can’t deposit the money online as of now, which will really discourage those investors who are too much into online transactions. However, I am sure this is not a cause of concern for people from smaller cities and villages who are the main target for this scheme.
Tax applicable on the money deposited and earned and maturity amount?
As of now, the taxation status of this scheme is ETE (Exempt, taxed, Exempt), which means money deposited is exempted from tax, interest earned is taxable, but the maturity amount is again exempted from tax.
This is exactly how tax-saving fixed deposits work, they also have ETE status. Some people will compare with PPF which is EEE (Exempt, Exempt, Exempt) and there is no tax to be paid in any case.
How much corpus you can accumulate by investing in Sukanya Samriddhi Account?
So how much money you can accumulate in this scheme if you try to get the maximum benefit from this scheme. Assuming you open the account the moment your girl child is born, you will have complete 21 yrs in hand, and if you invest the maximum permissible amount Rs.1,50,000 per year for 14 yrs (tenure allowed for investment).
It can accumulate to the approx amount of Rs 72 lacs after 21 yrs tenure. You will have approx 55 lacs, by the time the girl turns 18 years. So in a way this account can be meet your girl’s education and marriage expenses.
You can withdraw 45-50 lacs for education purpose and also have 25-30 lacs for marriage expenses (try to focus more on education expenses rather than marriage).
The below graph gives an approximate idea of how your corpus will grow in this scheme.
Should you open Sukanya Samriddhi Account for your daughter or not?
If you look at the features of this scheme, then you will realize that it’s very much close to PPF features, the lock-in period, interest rate, passbook facility, partial withdrawal, and taxation status.
So the real question is if it is better than PPF? Or Recurring deposit? In my opinion, overall it’s a good initiative by the government, the intention is pure and something very much required, but it still does not beat PPF as the product. I personally didn’t find any reason why I would prefer this scheme and not PPF?
However, when you look at this scheme, it’s much better than the traditional child policies and child plans (non-equity) from insurance companies. I would recommend this one over them.
How to open Sukanya Samriddhi Account – Real Experience
Thanks to Dr Dinesh Rohilla for sharing his real life experience of opening the SSA account. I am sharing his exact words and experience below
Quite surprised by the updated knowledge of post office staff in a small town like Pataudi regarding this scheme while the commercial banks in the area didn’t have any instructions regarding SSA neither there customer care helpline.
Anyway following is the procedure adapted by me :-
1) Downloaded form from internet along with gazette notification
2) Fill the form and deposit it along with –
- Date of Birth Certificate of my daughter
- My identity proof
- Latest electricity bill for residence proof
Note:- I had pasted photo on form on which it is written that photo is optional but at post office they told me to give them two more photos. So be prepared.
3) Please check whether they had correctly written in pass book the name of the account holder (girl child) and the depositor (parent/guardian).
In my case they had written just depositor name ( girl child which is not correct way) and after bringing it to their notice they promptly corrected and said they write this way on all pass books but will be happy to know the correct method.
4) Please deposit original birth certificate .Postal staff told me that there is no need to deposit original certificate and photocopy will be sufficient. Being a Birth and Death registrar earlier I know that wherever required Birth/Death certificate should be original. You can take as many as certificates as you wish from authorities by paying fee .
5) On the day of opening account you cannot do other transaction as per staff but can open account with any amount.
Overall experience was very pleasant and efficient working of staff really made me happy .
Thanks India post.
S.K Morthy also confirms that many people have started opening this account in the head post office in Chennai .. See his message below
Given the long-term nature of girls education and marriage goal, it’s important to beat the inflation and some part should be invested in equity component too. I would suggest SIP in mutual funds for some amount at least if not full.
For someone who is not willing to take any risk, this scheme is a good choice. Also, note that it’s a good idea to open this account if you are already exhausting your PPF limit and cant invest more on girls child name. Even though you will not be getting tax benefits, but you can still invest more money with help of this account.
Sukanya Samriddhi Scheme vs Other investment options
Also, one good point of this scheme is very much focused on girl’s education and marriage expenses and their future, so mentally it’s easy for investors to relate to it and keep their investment separate.
Below there is a comparison between Sukanya Samriddhi Account and PPF account (SSA vs PPF), along with recurring deposit – because you can open all 3 accounts for long-term and invest on a regular basis like on a per-month basis.
I hope you are the best person to judge if this is better than other alternatives or not.
Please share your thoughts on this initiative and comment back.
Manish , I have opened two accounts for my two daughters. Let me know that can I deposit 1.5 in each of the account or its is the combined limit .
Its a combined limit
Hi,
I have 2 quires.
1) Can I pay the amount in Mumbai Post office, If I open the Account in Bangalore Post office?
2) Ho do I get the my money back after my daughter is crossed 21 years ? Will it be cash, Cheque or online ?
Thanking you.
Hello,
I want to know that there is any option in this scheme we could see the money. Actually we have only pass book. Pass book does not show with the interest money. Is there any tool which I can see total money with the interest? Please tell me
I have no idea on that !
Thank you Manish!
Hi, I want to know if we continue paying for 5 years and due to unavoidable circumstances if we could not continue future investment then what will happen to the money which was invested for 5 years.
Thats not an issue .. you will still get the money
Hi Manish,
Can NRI parents open SSA for their girl child,
Please update.
No
Yes, there is no such flexibility for NRI’s. As per new Sukanya Samriddhi Amendments, if after opening the account your kid become NRI, the account need to be closed within time line given.
Thanks for sharing that SankanyaSamriddhiAccount
Hi Manish,
Please update the following information .
This scheme has been classified as EEE . That is from Tax Exemption point of view :
Investment in Sukanya Samriddhi Yojana scheme is exempted from Income Tax under section 80C. The scheme offers Tax Benefit under TripleE regimen ie. Principal, interest and outflow all are tax exempted
Thanks for the update, will do that !
Hi Manish,
Thanks for the detailed article.
My daughter is a OCI card holder and is US citizen. In some of the comments I saw that if daughter is US citizen then she cannot have SSA account. I was able to open her SSA account with her US birth certificate. Also, in the gazette notification I do not see any requirements for citizenship. Can you please clarify?
May be the rule was changed later.
Hi ! which bank did you open the SSA a/c ?
Suppose I inves t 15000 per year and unfortunetly I died what happen for my paid money
Pose tell me fact
YOur nominee will get it
I have a 2years daughter I feel this scheme free my 80 % stress about my daughter’s future fulfill
Glad to know that shashikumar k naidu ..
Is the scheme still operative can i invest now.
Yes, its still operational , you can invest in that
Dear Sir,
I have already invested 1.50 Lakhs in PPF for this financial year.Can I invest further in Sukanya Samruddhi and get further tax benefit.
Kindly confirm weather one can invest in both schemes 1.5 Lakhs each?
You wont get extra tax benefit, however you can put the money if you want
Hi Manish,
I am planning to invest Rs, 18000/year to my kid in sukanya scheme. Can I do mode of payment in yearly. Can you please confirm me yearly is possible in sukanya schemr?
Thanks
I dont think its possible
My grand daughter is born in US.Parents are now living in India and are indians.Post office says her birth certificate from US is not acceptable . Is PIO card not sufficient to open SSY a/c .Please clarify to mail Id ‘spguptahyd@yahoo.com
Hi spguptahyd
I suggest that you now take the RTI route. You can file the RTI and ask your queries to them. THey are bound to reply you on your queries.
Its a bit long cut, but works well
Manish
Hi Manish,
I have a doubt regarding SSA. Both my wife and I are working, and I’ve opened an SSA account in our daughter’s name in SBI bank, with me as the operator. Now, my wife wants to know
1. if she can also deposit money in the SSA account (online transfer is possible)
2. if so, whether she’ll be able to claim tax benefit for her share of deposit.
Tried searching the net for the answers but not successful. Will be really grateful if you could clarify.
Thanks.
1. She can do it, but only offline
2. Yes
Hi Sir,
Thanks for nice article…….
My husband are paying the amount to sukanya samriddhi yojana……….. Can I get the tax benefit ?
Thanks & Regards
Suma
No you cant
Hi,
In PPF to earn better interest, it’s advisable to deposit amount on/before 5th of every month. Is there any such best practice to follow for SSA account?
Thanks,
..Narsing
No , I think that would be an over kill .. The final amount will not matter too much even if you apply too much of optimization
Hi Manishji,
1) Can we invest twice in a year instead of in one time lump sum or every monthly for e.g 75,000/- Now in Oct’15 as 1st Installment and next installment of 75000 in Apr’16?
So Total Investment for 1 Year comes out to be 1,50,000.
2) If allowed then in this case will Maturity Amount at 21st Year will be Less than what paid in Lump sum or same?
Regards,
Jaykumar
I dont think it allows half yearly payments
What is better invest for girl child SIP or sukanya smiridhi yojana?
SIP would be a better choice !
Dear Sir,
Rather than being generic, I will put the question straightforward.
I am trying to meet PPF amount investment to the fullest possible every year (ie 1,50,000) and that is the only pure debt investment I currently rely on, but unable to do so due to shortage of funds because of diversification of investments across debt , insurance and equity/oriented funds. But then I am content if not happy with current diversification and portfolio. Now the confusion is whether should I split my planned yearly contribution to PPF and SSA from now onwards.
Now 2 questions:
1) Dont you think (esp for an educated and (hopefully) organized investor like me,) increasing amount of debt in single compounding fund (say PPF) fetches more than splitting it it to 2 debt funds? Wont I lose the base amount on which compounding happens, if I split. ( I am not concerned about 14 yrs withdrawal option, maturity period etc features)
2) Only thing I think SSA needs to be considered by me is that the govt may in future declare more interest rate for SSA than PPF….. and at later point of time I should not repend why I had not invested in SSA earlier… Isnt it? (This is also confusing existing planned investors. These kind of things should be addressed too actually when government declares them. )
Thank you
Bhargav
Dear Bhargav, you have hit the bullseye. I had exact same question.
Question 1: Compounding. I really believe its better to continue with PPF to get max benefit of compounding rather than splitting it.
Manish, Nandish look forward for your valuable inputs here.
Question2 again very good perspective. You never can predict GOI steps. But I am thinking I will just invest 1 lakh to begin with and subsequent years keep it few thousands
Please ask your query in one one lines.
Dear Sir,
Question 1: I am currently investing around 40000 yearly in PPF and that is the only debt instrument that I invest in. Now sukanya samridhi scheme came which is very similar. Do you suggest splitting my yearly debt investment (say 20K each) between PPF and Sukanya samridhi ( I have an year old daughter). Reason for my asking is splitting reduces overall returns on these fixed return instruments, right?
No , dont complicate it. Just keep continuing in PPF
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I am living in Saudi Arabia from 25 Jan 2008 to till date. My salary is 110000 rupees per month. I have some friend they are working 600 km from city. They tell to me send money for them also. In this case more than 15 lakh rupees send by me. Will there be any problem for me in future. Just give me your opinion.
What kind of problem are you expecting ?
Interest earned on Sukanya Samriddhi Scheme is taxable but it also says there is tax benefit on the maturity amount. Does this mean once the amount is withdrawn after the maturity period , the interest earned also will not be taxable .
Can you pls clarify . Thank you.
As per announcement in budget, the interest is NOT TAXABLE
I see a disconnect here. SSA has “Tax benefits on interest earned” — TAXABLE where as PPF exempts the tax on it. I hope this is not a typo or something. If it is correct, then I don’t see why one should go for SSA over PPF. Please clarify.
Hi Shravan
Now interest part in SSA is tax exempt !
CAN I GET BENEFIT OF TAX ON HUF FILE. IF I INVEST IN SUKANYA SAMRIDDHI YOJNA.
Regards
Amit
I dont think so , only parents are allowed deduction
Hi Manish,
I’ve a query regarding deposit in Sukanya Saving Scheme.
Can we deposit the 1.5 Lacs at the end of financial year perhaps (20th – 31st March) to avail full year interest?
E.g. we are in 2015-16 FY now, which option will give most of the return:
1. Deposit 1.5 Lac right away
2. Keep 1.5 Lac in Saving account (fixed deposit to earn interest), redeem it before 20th March’15 and then deposit it in sukanya account.
Will they pay full year interest in any of the above written situations.
Thanks,
Rachit
No , you will get interest only for the number of months you will have money deposited !
We are Indian citizens who have moved back from the USA. Our daughter is 4 years old and is a US citizen but has a valid PIO (person of Indian orgin) card. Is she eligible for this Sukanya Samruddhi scheme? The post-office were not sure about this.
sir,
One doubt to me my daughter born in my native place . but i am living in lucknow last four year,can open account in SSY scheme in lucknow. So pl. suggested.
Regards
Santosh
Yes you can do that .. If you have access to documents needed . you can do it !
Hi Manish,
Thanks for the inputs on SSA. A quick question. In the same financial year, can my wife and I invest 75,000 each for our only daughter’s SSA account and claim exemptions under 80c individually?
Hi Anand Prabhu
Yes you can do that
Thank you Manish.
hi,
My daughter is born in 2005.is she eligible for this scheme.
Regards
Sarita
Yes, for the first year only . For girls who have completed 10 yrs just now are also eligible !
Yes
Hi,
Thanks for the nice article. I’ve a couple of questions if you can please clarify.
1. The restriction of deposit till 14 years: The completion of 14 years is calculated based on date of opening the account OR the age of the girl child?
2. Maturity after 21 years: On the same line as Q1 above, the completion of 21 years is calculated based on the date of opening the account OR the age of the girl child?
3. Partial Withdraw :I assume 50% can be withdrawn after the girl attains 18 years of marriage.
4. If the girl marriage happens before 21 years of maturity, will the account be closed automatically and the proceeds will be given to the girl child? Can the money be withdrawn just before the marriage to manage the marriage cost.
Thanks for your input on the above.
Regards
Amit
1. Date of opening
2. After opening the account or when girl marries, which ever is earliar
3. yes
4. You can then close the account on declaration that the marriage is happening and account will be closed and proceeds will be given
Manish
Thanks Manish for the crisp reply. it’s quite helpful.
Hi Manish, I went to the PO yesterday to open an SSY account in the name of my daughter. To my surprise, the person at the PO said that I had already exhausted my limit of 150000 on my PPF for this year and cannot put in any money to the SSY. I told him specifically that these two are two independent investments and each has a cap of 150000. But he would not listen. Am thinking of opening the SSY in a PSB as this will provide me with the option of online investment. Just thought of highlighting the ignorance of the people who are supposed to guide investors.
they might be telling you that because the tax benefit limit is only for 1.5 lacs. You could have told him that you are not looking for tax benefit .
Hi Manish,
Could you please help me to highlight this point..
– Will the investor loose the interest amount if he deposits the money in different intervals , for example FY (15-16) –
Apr – 20000/- ; June 50000- ; Oct 80000/-
No you wont loose any interst
Hi Manish,
If some NRI opens the SSY then is it possible for post office or bank to trace it ?I think they will be least bother about that.What can be possible impact at maturity time?
Hi manish/All
pls comment on my query
NRI cant open it !
NRI cant open it
Hi Manish,
Scheme is under EEE .
http://taxguru.in/income-tax/sukanya-samriddhi-account-tax-benefits.html.
If kid is 10yrs old and we need to invest for 14yrs then maturity in this case will be after 21yrs of age rite?
We need to remain invested for 14yrs right ?
Hi yogesh
Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also
Manish
Hi Manish,
There are couple of points that should be changed.
1- Accrued interest is not taxable any more. So SSY is EEE too.
2- Interest rate is 9.2% now (2015-2016).
3- In the difference you can add PPF offers 25 basis points higher than the bond yield where as SSY 75 basis points. So interest rate of SSY will always be a li’l higher than the PPF ( almost 0.5%)
I guess I have changed it
As always…. nice article Manish… Thanks for your time in consolidating & sharing it at right time…. 🙂
Thanks for your comment Shiva
I might be asking relatives or friends to do so on my behalf. I think anybody can deposit the amount? Is it correct?
Yes, I guess so
Query:
What happen if parents and the daughter become NRI after opening the account and invested 1.5lakhs already on it when their status was resident?
Thanks
Kalyani
In that case, you can continue it. But how will you deposit the amount each year ?
I paid Rs.10000 against this sukanya samriddhi account on March 30th. When I tried to give this as tax exemption in my office they say it can’t be claimed under 2014-15 and it’s valid from 2015-2016 only. Please clarify
Hi uma
I am not very sure on this. Will find it out !
Manish
Manish,
While the lock-in period of SSA is much higher as compared to PPF, there is another perspective to look at. SSA is a populist scheme and will involve only a certain sector of Indian citizens ( parents with daughter/s less than 10 years old). PPF has far bigger investor circle. So when the time comes for revising the interest rates, the govt will benefit more by reducing the interest rate of PPF rather than SSA. Second, as this is a populist scheme, I don’t see change in govts making any diff to SSA policies/rates. No party will be inclined to touch this sensitive area. As of today, SSA interest rate is 9.2% where as PPF is 8.7%. SSA is also EEE now i.e. interest earned is tax exempted as well. I see a fair point in investing in SSA and not just in PPF.
Hey Sarang
Thanks for sharing your experience with all of us. It was a great learning.
Manish
Hello Sir,
I want to know that can both parents contribute money to single girl child for eg if one lakh has to be deposited, 50000 from each , do they both claim for tax exemption
Yes, that should be possible !
The Gazette notification ( the PDF doc ) does not mention any taxable on interest part ? @Chauhan Could you please point the right document on the tax part.
If there is tax applicable on interest earned, then I wont go for it, rather I would go for PPF in the name of everyone of family members. However, if you left with more corpus and still want to invest more in safe deposits, then think about this plan.
– Sunil
Hi Sunil
I am not sure if the gazzete document has come or not . But I think you should not doubt it because in budget speech itself it was clearly mentioned by finance minister. The PDF might take some time to arraive !
Manish
Hi Manish,
I have two queries:-
ie. Money Deposited from Father’s HUF will be eligible for 80 c deductions ?
and
Some other articles over internet, like the one below, are suggesting that the entire maturity value and the interest earned under this, is tax-free ?
http://profit.ndtv.com/budget/sukanya-samriddhi-scheme-10-key-highlights-744148
Kindly help & suggest above.
Kind Regards
Mukul
With recent changes, its cleared that there is no income tax on maturity
My daughter
born on 7/4/1994 and studying in 3rd year BDS. Whether i can open acount in her name.
No , its only for daughter below 10 yrs age
Hi Manish – It’s really a well drafted and eye opener to many of us to understand the pros and cons of the scheme. I have few questions related to the Interest calculation on this scheme as well as PPF.
Ideally we have to deposit the amount of contribution before 5th of every month for the interest to be calculated by End of the month – If the frequency is monthly right!
If it is yearly then how the interest part is calculted
I depoisted 1000 on April 4 by opening of the account and later if by the end of the year say in 10 Jan’16 if i deposit 120000 and then on march 25th i deposit the remaining amount to make it 150000 i.e; 29000- if you could let me know the following
1. Is the interest is calculate on a monthly basis on a certain date or at the end of the year.
2. will the investor won’t loose the interest amount if he deposits the money in different intervals like above
Thanks for your help on this in advance…nice work………..!
1. Yes , like the PPF I guess
2. No
Hi,
Per finance bill 2015-2016- comparison chart needs to be updated as now this scheme is EEE.
“Investments in Sukanya Samriddhi Scheme is already eligible for deduction under Section 80C. All payments to the beneficiaries including interest payment on deposit will also be fully exempt”
Please update.
thanks,
Jagdeep.
Already done
Dear Sir
Account open only Post office bank account wrong
Regards
Ajay Yadav
So what is the question ?
Manish ji
Can you kindly simplify what the following clause mean. Is the interest taxable for this FY 2014-15. Is it recommended to open account next year
Clause 7 of the Bill seeks to amend section 10 of the Incometax Act relating to incomes not included in total income.
It is proposed to amend the aforesaid section by inserting a new clause (11A) so as to provide that any payment from an account opened in accordance with the Sukanya Samriddhi Account Rules, 2014 made under the Government Savings Bank Act, 1873, shall not be included in the total income of the assessee.
These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016- 17 and subsequent assessment years.
Rajeev
Thats beyond my understanding truly speaking .
Can someone please share the – website “link/URL” from where the relevant form can be downloaded along with gazattet notification
Dear Sir,
I feel instead of SUKANYA SAMRIDDHI YOJNA it must be SANTAN SAMRIDDHI YOJNA which doesn’t differentiate between girls & boys.
If govt is so much serious then it must reserve & exempt some percentage of fees for higher studies.
Hi DHABAL SATAPATHY
Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also
Manish
I had been to Sri Chowdeshwari Post Office Bengaluru last week. Being one woman P.O with lots of queries on the SSA A/C. It was quiet surprising to see the lady part time helper in the office giving full information on the scheme along with details of KYC requirements, interest details parents details etc. She also was telling about the convenience of Core Banking which is to be implemented shortly. Kudos to the Postal Dept.
Welcome .. Glad to know that Aravinda Baliga ..
One more question Sir. What us meant by interest is taxable and maturity amount in not taxable in Sukanya Samriddhi Account ???
Now everything is non taxable !
Thank you so much Sir for giving complete information to us. I have one question related to deposit scheme. How many deposits I can made in one year in Sukanya Samriddhi Account ???
To open an account for the girl child(Age 01 Days- 10 Years) is very easy and also the tax free investment . Just dont approach to the bank , because the proper guideline is yet to receive at any bank. But can be easily opened in any Post office with the simple process. Produce 2 photographs of the girl child and any one of residential proof of parents(which is easily available to every one in India. Thanks to AADhaar) . Also the Birth certificate is required for the proper age proof of the children. Up to 150000 Rs /Year can be invested for the one girl child.
Thanks….
Hi RAMAN THAKUR
Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also
Manish
Hi Manish,
Great article. I request you to consider updating the PPF – SSY comparison table to include EEE instead of ETE as it is now. Otherwise to get the updated info one has to traverse thru the entire comments section.
Thank you.
Regards,
Praveen
Sure .WIll do
Hi Manish,
I would like to know, if i can open SSA account for my daughter. She is USA born. 3 yrs old. she is currently in india on PIO card.
Thanks,
Anand
No Anand
Its only for Residents !
Hi, can somebody tell me what’s the definition of the maturity amount?
The table above says that for a FD interest is tax exempt while maturity amount is taxed. Does that mean that if I invested Rs 100 in a FD and got Rs 105 on maturity out of which Rs 5 is interest. Then apart from Rs 5 being taxable , Rs 100 is also taxable?
सुकन्या समृद्धि अकाउंट खोलने की कोई भी गाइड लाइन आज तक १९/०३/२०१५ नहीं है न आज की तारिक मै कोई भी बैंक मै खता खुला है
I have added few experiences in the article . Please go through them
I have Opened the Sukanya Samriddhi Account for my 6yr young. In the place of Depositor name, they have mentioned my daughter’s name and “in the brackets (through Mother and My Name”
I have submitted daughter’s DOB photocopy, my ID & address proof and my 2 photos. And, the postal staff told me that Rs 1000 is minimum amount (mandatory) to open this account. I am NOT sure whether this is a rule. But, I feel this minimum Rs 1000 may discourage lower income people from opening the account.
Rs 1000 is the minimum you need to open the account
tax benefit on earn interest- I mean need to pay the tax on earn interest or not?
Experience of Opening SSA
Quite surprised by the update knowledge of post office staff in a small town like Pataudi regarding this scheme while the commercial banks in the area didn’t have any instructions regarding SSA neither there customer care helpline.
Anyway following is the procedure adapted by me :-
1) Downloaded form from internet along with gazette notification
2) Filled the form and deposit it along with i)Date of Birth Certificate of my daughter, ii) my identity card copy ,iii) Latest electricity bill for residence proof
Note:- I had pasted photo on form on which it is written that photo is optional but at post office they told me to give them two more photos. So be prepared.
3) Please check whether they had correctly written in pass book the name and differentiate who is account holder (girl child) and who is depositor (parent/guardian).
In my case they had written just depositor name ( girl child which is not correct way) and after bringing it to their notice they promptly corrected and said they write this way on all pass books but will be happy to know the correct method.
4) Please deposit original birth certificate .Postal staff told me that there is no need to deposit original certificate and photocopy will be sufficient. Being a Birth and Death registrar earlier I know that wherever required Birth/Death certificate should be original.You can take as many as certificates as you wish from authorities by paying fee .
5) On the day of opening account you cannot do other transaction as per staff but can open account with any amount.
Overall experience was very pleasant and efficient working of staff really make me happy .
Thanks India post.
Hi Dr Dinesh Rohilla
Thanks a lot for sharing this amazing information. Many people were looking for it . I have included this experience of yours in the main article
Manish
Thanks to you too Manish.This is first investment in my life which I had done after thoroughly understanding the financial implications both long term and short term;the knowledge of which I had after going through all 3 books published by you. I wish I had read that book when I had started earning.!!!
Welcome .. Glad to know that Dr Dinesh Rohilla ..
Very good article. Can we open SSY a/c for girl child born in US for Indian parents of Indian citizens? This scheme can be made ver attractive and better than PPF
by making EEE class instead of ETE. Govt may consider on popular demand.
Its already EEE now !
Can SSA can be opened in the name of the girl child who is an NRI?
Hi Poornima
There is no clarity on that at the moment
Manish
Hi manish,
I have 2 daughters, one is 2 years and the other is 2 months. My question is if i open one account for each of my daughter, can I invest 1.5 lacs in each account(total 3 lacs) or is there a limit that both accounts can have only maximum of 1.5 lacs per financial year?
.
You can invest 1.5 lacs into each ! , but you will be able to claim tax benefits only upto 1.5 lacs in total
it is useful for NRI GIRL Who was born in America for Indian Parents?
I dont think so . AS of now the guidelines does not mention anything about NRI
Thank You Manish
Sr SUKANYA SAMRIDHI ACCOUNT ARMY POST OFFICE (APO) mei bhi bhar sakte hain kya? Plz sr i am army person clarify me.
If the post office allows, then I think you can
Friends, don’t take it as inferior step of Govt or inequality issue between boys and girls..And pls don’t take it in terms of Tax exemption only. It is great initiative for encouraging girls child because most of parents always worry about girls future, education and marriage..This scheme can relief the parents upto a great extent…small routine saving of parent can brighten the future of our Laadli…Thanks for indian Govt..
Hi Vikash Rana
Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also
Manish
Very nice article and great initiative by Indian Government for Girl child.
Hi Manoj
Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also
Manish
Sam Mehta ji and Manish ji
Pl post here if any information as to any Bank or post office opening this account.
Does anyone know if ANY public sector bank or Post office where these accounts are actually opening? I checked in Noida at PNB, SBI, Union Bank, Bank of India and one more…none of them have any instructions to open it. The Ministry of Finance website does not mention which branches of scheduled commercial banks have been allowed to open these accounts.
Now that this is EEE scheme, there is a lot of interest and the financial year ends in a few days.
If you can share any branch in New Delhi or Noida that is opening these accounts, it will be helpful
Regards
Hi Sam Mehta
I am not sure of the exact branch where it can be opened .
Quick question. I have already invested upto 1.5 L under 80C. Now if I invest further 1.5L under this scheme, then obviously I will not get any additional tax benefit on my income. But what about tax on interest earned and maturity amount? Will those be taxable?
So you do not get additional benefit since you have exhausted 1.5 L under 80C. However the rest of the two “EE” would still be applicable which is exemption from Interest earned and Exemption on Maturity. That is what I could interpret from what was said on 28th.
No tax on interest and maturity in Sukanya Samriddhi scheme
Another addition to scheme in budget speech I heard few hours back!!! Interest earned will be now tax free (just like ppf). Big boost to the sheme now.
Seems like this is EEE now. Might get some special treatment in terms of interest rates for next couple of years I guess.
Hi Mahesh
Yea, now its EEE 🙂
Hi Sharad Madan
Yea , that was annouced !
Dear Sir/Madam,
I am working in Lao PDR country since 2008 with a yearly basis work visa and have an NRE account in India.
For saving some tax burden may i know which scheme i can take?
Thanks in advance for your kind reply.
Regards
Hi Srinivas Rao
You can start a SIP in ELSS funds. Or take a 5 yr Tax saving FD !
which is good plan for child
I have enquired about this account in SBI , they said they did not get any instructions from Govt and their Management till now to open this account
SBI is a big Govt Orgnaisation who should not tell like this.
Does any one opened this in any other Govt Banks in India.
Hi Sri
Its still not notified to all state banks . Wait for couple of months before you apply !
It is Good for Low income people they can at least save some money for Girl Future. indirectly it is Long run Saving. And saving is good habit.
Hi datta
Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also
Manish
Hi Manish
1 Query on SSA Scheme
Can Mother / Father open separate a/c of SSA for their daughter
Are you saying mother opens account for daughter and father also opens the account for same daugther.
Then the answer is NO , one account for one person !
sir
date of maturity wheather 21 years from the date of opening or the child attained 21 years Pl. let me know on my given e mail address
21 yrs from the date of opening !
Rajiv ji
You have overlooked tax factor.Even if one fall in 10% bracket return is less than PPF.
Dear Manish,
I need to clear myself here.
Suppose if I put Rs. 1000 per month in PPF and Rs. 1000 in SSA, what will be the returns?
As per my understanding below is the approximate calculation for PPF and SSA account—–
For PPF account –
Rs. 1000 per month , i.e. Rs. 12,000 per years
At 16th year —
total investment in 15 years tenure will be Rs. 1,80,000
Returns on investment will be Rs. 3,74,073 (with assumed interest rate of 8.7%)
At 21st year —
total investment in 20 years tenure will be Rs. 2,40,000
Returns on investment will be Rs. 6,45,280 (with assumed interest rate of 8.7%)
For SSA account :
Rs. 1000 per month , i.e. Rs. 12,000 per years
At 21st year —
total investment in 21 years tenure will be Rs. 1,68,000 (we need to pay for only 14 years)
Returns on investment will be Rs. 5,95,551 (with assumed interest rate of 8.7%)
Returns on investment will be Rs. 6,31,261 (with assumed interest rate of 9.1%)
based on upon it is giving good returns upon less investment.
You have not considered taxation here . PPF will beat SSA
Thanks sharing this infomation Manish
Manish ji
Whether this scheme has any advantage over PPF or Long term FDR except little excess rate of interest.
Under this scheme
Interest is taxable and tax will be paid every year by one of the parent due to clubbing.
80c is already loaded with options and is also available in PPF and long term FDR.
When we have already paid tax on principal/investment (it is not income but investment from tax paid income) and interest (accrual basis every year) then what is the meanig of exempt on receipt when all tax is already paid.
Pl guide why one should invest in this scheme.
Hi Rajeev
The scheme is not better than PPF
I thing this scheme will work only in rural area & intest point of view it will be work
Hi Bhushan
Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also
Manish
Hello,
I tried asking to many banks about this scheme but they seemed to be unaware of this. will take the print out of the Gazette to them and lets see how they react
Hi Rahul
Its a new scheme and not launched in every state as of now . Wait for some months before you apply for it !
Manish
A very good initiative by the government to actually encourage parents to bring up and raise girl-child (and not abandon or shun them when they are born).
As a proud father of girl-children i find this scheme both good and “incomplete”.
As someone else pointed out, this is a kind of incentive of luring-with-carrot. This is only fixing the symptoms, but not the root cause ( culture and mind-set take a lot of time to change – No amount of carrots are going to fix this problem. The solution should start from each individual families).
I am now afraid that this scheme can also be potentially misused (especially due to the “lenient” clauses under which a premature withdrawal or closure is allowed)..i would not want to list in any situations..but will leave it to the reader’s imagination on how this could be misused.
-Ramesh
Hi Ramesh
Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also
Manish
Hello Manish,
Thanks for info, I have one doubt here, who can claim 80C mother or father of the Kid or both ?
The parent who has become the guardian will get the benefits !
The point worth mentioning here is that you can open a PPF Account only once .
so if zou want to avoid opening a PPF account for zour child then this scheme is a great idea because your child might want to open a PPF account later as a savings instrument.
Good point !
Thank you Manish for such a great article.
I heard regarding swavalamban pention yojana. I asked SBI regarding the scheme but they said they don’t have any idea. Could you please share details on the same in one of your blog?
Its not launched at each and every state . Wait for some months !
Good initiative by government but i think PPF is still better than SSA.
PPF:
More transparency than SSA.
Online facilities.
Interest earned is tax free.
but little less interest rate than SSA.
Yes !
Hi Manish,
This is a excellent artcile. Have below queries?
1. If SSA is similar to tax saving FD, then which benefit makes SSA different from FD?
2. If father is in 30% income tax bracket and mother is in 10% or tax exempt bracket, then I assume that mother can be guradian of girl and avoid tax on interest. is this possible.
Thanks
Satish
1. Its more closer to PPF and not tax saving FD . SSA maturity amount is not taxable like tax saving FD !
2. Yes its possible, but only when she contributes her own money. If she takes money from father and then deposited, then clubbing of income still applies and father has pay the tax !
Thanks for useful info.
SSA has bit more interest rate than PPF. Wouldn’t it affect in long term?
I assume Gov. [at least Modi in this term] will keep SSA’s interest rate bit more to attract more people.
I would like to share this info [along with link obviously] with friends. Please allow.
SSA has interest more, but then its taxable which makes it less after calculating tax ! . So in long run, its not a better option
Manish
Thanks Manish..!
Hi,
I have my own PPF account and I know I can deposit maximum of 1.5 lakh per year in it. My daughter is 2 years old and wife is house wife. My question is can i deposit 1.5 lakh in my account and another 1.5 lakh in daughter’s PPF account and one another 1.5 lakh in wife’s PPF account ?
No, by the law, you cannot (though there have been folks who have done that and have not been caught). I can invest a total of 1.5L including my own and my dependent childrens’ PPF accounts. The total should not exceed 1.5L. It is ok to invest separate 1.5L for spouse, but not children.
Thank you @Jay Sheth,
So if this is the law then as per my understanding “Sukanya Samriddhi Account” is advantage over daughter’s PPF account to those peoples who are already investing 1.5 lakh in own and 1.5lakh for spouse’s PPF account and still they have extra money with them then they can open Sukanya Samriddhi Account instead of opening daughter’s PPF account.
No you cant do that, read https://www.jagoinvestor.com/2014/02/5-must-know-rules-before-opening-ppf-account-for-minor-kids.html
Thanks Manish,
I got my all answers. This means there is no any benefit to open so many accounts on family members name if (max limit to invest in all accounts) is equal to (max limit to invest in one’s account) i.e say 1.5 lakh for now.
yes, incase of PPF !
@ddm, yes, you can invest 1.5L for you in PPF and an additional 1.5L for your spouse. You cannot invest on behalf of your minor children beyond this. So if you have 4.5L to invest, yes, you can go for PPF for yourself, PPF for your spouse, and Sukanya Samridhhi Account for your daughter. Until we get clarity (further concession) on tax treatment, PPF would be anytime superior to Sukanya Samridhhi Account, being an instrument under EEE category.
Hi Manish,
very nice article. in my opinion SIP/ ELSS is best in long run. Am I right ?
regards.
Bharat gohil
Correct ! .. most of the times !
Hi Manish
Thanks for the insight..was wondering if you could attach an excel on the cumulative amount of 72 lacs ..
I didnt get it ? You mean you want the excel sheet which I used to calculate ?
Great Effort Manish 😉
Presumed deposit in this a/c is by persons other than father / mother.
So 80 (c ) benefit shall be enjoyed by depositor
Querry
1. will deposit in this a/c will be deemed income of father or mother?
2. will interest paid by bank form part of income of father or mother as their deemed income.
1. No , its the deposit .. I mean when you invest in PPF , you invest out of your income only right ?
2. Yes, it will be part of their income , above Rs 1500 per child !
I liked the way content is presented with details and especially chart views. Excellent.
I believe it would have been nice to get links for saving schemes better then presented below.. I mean you compared three that itself is good.. but may be more detailed would have been better.
Which other point you need in comparision ?
but you have made and assumption of 9.1% every yr.
and that’s not true
Correct . Its just assumption . And its mentioned clearly that its assumption . It just gives an rough estimate and its not reality .
Tax has to be paid from your other income every year. Then what is the meaning of exemption on maturity. Except that rate of interest declared is slightly higher, in my opinion this has no edge over PPF if you have taxable income. Since we have so many options for 80C investing in this will only be attractive if interest is exempted from taxation or clubbing provisions.
Thanks for sharing your opinion on this point !
make sense Thank you!
Hi
First of all I thank you for sharing such a useful information in detail.
As per the information mentioned above “one account per child”.
But is there any way to open two separate account by both the parents(father and mother) separately?
And how both parents(father and mother) can get tax benefit?
NO , One child should have just one account on her name, opened by any parent.
Thank you!
wanted to know about ELSS i mean its EEE or ETE
ELSS IS EEE UP TO LIMIT OF RS. 150000/- PER YEAR UNDER SECTION 80C OF I,T. IT HAVE LOCK-IN OF 3 YEARS.
Its EEE if the investment tenure is more than 1 yr
Hi,
I tried reaching out to SBI and post office last week but the staff was not even aware about the scheme. Do you have any update / information on which all areas are covered or if any bank has started offering the scheme.
Regards,
Apurva
This is launched right now from only some districts . Wait for some time and let it get implemented all over India
I am just thinking why Govt is not doing the same for male child too?? It will be a good investment for male baby too and they can use the money after 21 as by the time they would have finished their education so may can use the money for starting the business etc…
Because the government thinks male babies are no longer important. Most of the laws in India are biased against males as it is, so schemes like this are only a logical follow up to tilt the scales even further. It’s all vote bank politics.
Thanks Manish. Very good article.
1. 80C is too crowded with too many options. I think Govt need to give additional deduction – else, there is no charm.
2. For RD a/c, why you said it is TTT. To my mind, maturity (Principal) is not taxable as interest would be taxed in respective years. Pls correct me, if I am wrong.
1. Yes- Lets see it 80C limit is revised this year or not ?
2. Thats not true. the interest part is taxable in respective years, but still when it matures , if you get money more than your principle , then rest is your income and income tax is to be paid. Let me find more on this and make an article.
Manish
RD A/C IS TTE. INTREST IS CREDITED IN OUR A/C ON QUARTERLY BASIS. THE INTREST IS TAXABLE YEAR TO YEAR. BUT ON MATURITY IT BECAME TAX-FREE,BECAUSE U HAD ALREADY PAID TAXES ON INTREST EARNED IN PREVIOUS YEARS……
Ok thanks for sharing . Will also make a post on this
Excellent coverage, all components needed are included. 2 things come to my mind:
1. Can add somewhere for clarity that: for tax purposes, the parent who contributes to the account can claim for 80C benefit (I assume that is the case here).
2. You can compare post-tax return of both PPF and SSA for better comparison, assuming 10%, 20% or 30% bracket. I think PPF’s return will beat SSA with 20% taxation.
Granted, I don’t think it is taken up yet by all post offices or banks, at least in the state I live in (TamilNadu).
1. Yes, I have already mentioned that it comes under 80C
2. Yes, it can be done .
Dear Manish,
Thank you for the article.
Here is my opinion and some doubts. Please help to clarify.
PPF is better than this new scheme because the Interest is not taxable for PPF. For new scheme, If interest is taxable.. definitely it will come below the PPF returns.
Second point is recently I tried to open the PPF account at SBI, They refused open saying that Minor’s can not open the PPF Account. This may be due to bank staff not aware of rules fully. Even if I can open PPF Accounts for my two kids, Together with my PPF account, I can deposit only 1.5Laks in total. This is again limitation.
With these two points, May be SIP may be only option available for amounts above 1.5 Laks year.
Please correct me if my understanding is wrong.
Thanks
Lakshmaiah
You can surely open the PPF account for minor. Show them the govt rules as per Post Office website . Meet branch manager if required.
Like you said, SIP is one of the best options for long term duration !
This is a good initiative by government, but 1,50,000 per year is a big amount for people who don’t know anything about Mutual funds. IN fact, it’s quite a big chunk even for a person who’s earning close to a lac if you calculate per month.
However, i think on the upside, the 9.5% interest rate is very attractive. Given that mutual funds generate around 12%, this is a close tie-up, but the biggest disadvantage is that the interest rates can vary year to year. So that makes it a risky investment. What if the interest rates are lowered to 5% next year? Your money is locked in and you don’t get the best bang for your buck.
Overall, good attempt, but faulty execution
Ram
The interest rate is 9.1% and not 9.5% . Also the interest rate will not be lowered to 5% unless the FD interest also comes to the same level . More or less it will be in line with the FD rates.
Manish
It’s a wow write up Manish. Personally I feel for parents who are unable to fund the girl child’s PPF account due to restriction of capping if ₹.150,000/- this is a boon & for knowledge purpose is the interest linked to 10 yr GSec rates as in case of PPF, if 9.10% is guaranteed for the full tenure then I feel this will beat the PPF returns. Isn’t it ???
Hi Priyesh
The interest rate as of now is fixed at 9.1% and will be updated from time to time as per govt notifications . But I am not sure if its linked to 10 yr GSec or not . Also its not fixed for whole tenure, exactly like PPF . Overall I think its very much in line with PPF form returns point of view
Great article.
Nice initiative from government.
But I think it’s bias. Why for girl child.
Those parents who have mentality of saving for their kids generally don’t differentiate between girl and boy.
Thank you for nice and clean insight.
Its not biasness. Its for encouragement . YOu are talking about those parents who dont differentiate, but then this scheme is for those who do ! . There are millions of them .
So, the government is basically rewarding bigoted parents who look down upon the girl child. Way to go, GOI!
All the informations are provided in much proper way.
Extremely helpful information.
One chance should be given to those parents whose girl child has crossed 10 years recently.
Thanks.
As per notification, those parents whose girl child has recently crossed 10 yrs can also open the account .
Dear Manish,
Thanks for sharing.
I think sukanya samridhi account is better than children plan of insurance companies.
Thanks
Thanks for sharing your view on this Prabir !
This scheme I thought is for poor people – especially, children of maid servants – how can they afford saving Rs.1000/- in a disciplined way ? For them, if the Govt. can think of their contribution if the servants invest, say, Rs.50/- p.m. that would be really of help to them.
Yea its a good idea . But then there is NPS where govt contributes Rs 1000 a year !
Is the amount invested in scheme is within the maximum upper limit of 1.5 lac under 80C? or it is in addition to it
Its not seperate limit. Its with in 80C only . The max you can invest in this scheme, PPF ,ELSS, insurance policies is 1.5 lacs only
” The max you can invest in this scheme, PPF ,ELSS, insurance policies is 1.5 lacs only”
I think the correct statement would be that max tax benefit that we would be getting under 80C is still 1.5lac … however, one can invest upto 1.5lacs/year in PPF, this account 1.5lacs/year, limit less on ELSS, insurance policies etc … total max amount that can be considered for tax benefit under 80C would still be 1.5lac
Yes Ramesh
I think your statement is more accurate .
YOU MAY OPEN ACCOUNT AT ANYTIME TILL THE AGE OF 10, BUT AS GIRL ATTAINS THE AGE 21, IT MATURES…! THIS IS THE TRUE INFORMATION.
Did I not say exactly that ?
it is useful for NRI GIRL) (INDIAN PARENTS)?
NO
As per document by govt, it matures when girl marriages or in 21 yrs , which ever is earliar !
Dear Manish,
Small confusion regarding ‘maturity of the account.’
Is it 21 years from the account opening date (or) is it after the girl child attains 21 years?
If an account is opened on the girl child’s name (age 10 years), account matures in 11 years (girl’s age 21) or in 21 years (girl’s age 31 ).
Thank you!
Sreekanth
I was also confused on this point earlier, but when I read the exact point made in the PDF, seems like its 21 yrs from the date of opening .
13. Closure on maturity .- (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 twentyone
years, the operation of the account shall not be permitted beyond the date of her marriage :
Manish,
Thank you for the reply.
I believe the no of contributions and maturity of the account are based on account opening date and not on girl child’s age.
Maturity of account – 21 years from account opening date.
Contributions allowed – till 14 years from account opening date. ( I think the condition, 14 years from account opening date (or) 21 years of age whichever is earlier, is not available in the gazette.) What is your opinion?
Thank you!
Dear Manish,
Very well written article.
One query on ‘corpus accumulation’ part. Are the contributions allowed for 14 years or 21 years?
Contributions are allowed only for 14 yrs from the date of opening of account or upto the age of 21 yrs, which ever is earliar !
Dear Manish,
Thanks for the reply.
Then in that case the maximum allowed no of contributions can be 14 only (in case an account is opened for a new born girl child).
If my assumption is right, the corpus of Rs 85 lakh can not be accumulated.
Correct me if i am wrong?
Yes Sreekanth
I think you are correct. I made the mistake of calculating it for all 21 yrs, let me correct it . Give me some time
Manish
Very informative.
Thanks.
Welcome !
Sir, I am having a PPF a/c in the name of my 5 years old daughter this year ,I am not claiming exemption under sec 80c.can I open one sukanya-samriddhi a/c.Can a HUF open this a/c and claim under Sec 80c.
natarajan
HUF can do that. But why are you not claiming 80C for PPF ?
Is interest taxable or exempt ?
as per The Hindu, it states that “Mr. Modi said interest income and withdrawal from the scheme has been exempted from taxation.”
As per the document provided by govt, the interest is taxbale.
The campaign will be initially implemented in the 100 districts, including 12 in Haryana, and across the country where the sex ratio is rather poor.
http://timesofindia.indiatimes.com/india/PM-Modi-launches-Beti-Bachao-Beti-Padhao-campaign-says-female-foeticide-is-a-sign-of-mental-illness/articleshow/45985741.cms
Thanks for sharing that DK!
Hi Manish, Good day!
Comparison table is really Excellent. Interest rate is fine if we compare with PPF as of now. I think its a Modi’fied scheme of PPF by Modi Govt.
Good initiative for future of Girl child…..!
Regards,
Suresh D
Thanks for your comment Suresh !
Dear All,
As far as Maharashtra, This scheme is valid only for 10 districts (Pune excluded!!). Please read the news carefully to know if your state and your district is selected for this scheme.
Please correct if I have wrong inputs.
Thanks for sharing that !
How can they restrict this scheme only for certain districts? Don’t they want to help the girl children from other cities? I am sure, it would be rolled out to the entire country – all villages and cities soon. Anyway can you please share the link, where is the list of districts mentioned?
Thanks,
Amit
Hi Amit Kulkarni
As its a big initiative , its going to spread slowly. So wait for sometime !
Hi Manish,
I have a query :- Can only parent be responsible to open this account for their daughter? I mean, Consider an example, Let say Son age is 20 and Daughter Age is 10. Parents can’t spend or they don’t have the spending limit to open the account,but Son is currently on Job and he want to spend the money for his sister.So will this be possible,that instead of Parent,Brother will open the account.
Chinmoy
As of now the document says that Parents have to do it . But why cant parents open the account, brother gives money to parents and parents make the payment, Its easy to set this up !
Manish
Thanks Manish,
The main reason for the above query is, Son can get the tax exemption on his salary by investing to this account. But as you said, only parents are responsible to open this account.
No , Son cant get tax exemption for contributing for sister . Only parents can get it .
Nice Information Shared, Thanks!!!
Its a good initiative from GoI.
I think, We should not compare SSA account with PPF in any case as Both accounts are of different purpose and use.
While one invest in PPF mostly for retirement in his mind where as SSA is purely for Girl child’s Educational and Marriage purpose.
You can Invest 1.5lacs max in a year (including your PPF acc, child1 PPF acc, child2 PPF acc) wheare as in SSA you can invest additional (If you can) 1.5lacs for your girl child, if you have two girl you can invest 3.0 lacs total. (One should have money to invest :D)
I am not sure but I guess, SSA will give good returns if we compare it to traditional child plan.
And Good thing is that you can invest upto 14 yrs of your child age, which force you to start early.
Its a very important point thats its much better compares to traditional plans ! 🙂
Nice Article Manish with good clarity.
Thanks
Hi Manish,
There are a couple of important corrections in the above article:
1) “Account can be opened only before the girl child completes 10 yrs age” => This is not true. If the girl child is say 12 year old, the girl can herself open the Account in that case, without the need of parent or guardian.
2) “Sukanya Samriddhi Account will get matured when the age of girl child reaches 21 yr” => This is not true. The account matures on completion of twenty-one years from the “date of opening the account”. So if I have a 5 year old daughter, and if I open her account today, it will mature after 21 years from today, that is when my daughter turns 26.
Regards,
Jay
Hi Manish,
I apologize for my misunderstanding and confusion caused on the eligible age for account opening. It is indeed 10 year (or max 11) as government is giving a buffer time of 1 year.
But I still read the maturity term as 21 years from the date of account opening, irrespective of the age of the child attained.
Yes, I see that I made that mistake earlier . Now I have changed it in the article. Thanks for pointing that out !
The point from a taxation perspective which everyone is missing is that in case of minor child the income is clubeed in the hands of the parent. In that scenario interest earned on this deposit will be taxed at the rate of 30% in the hands of the guardian. Wheres in PPF, the income from PPF deposits is exempt hence no income is clubbed in the hands of the parent. Thus effective yield for PPF is 8.70% and that of this scheme is 6.37%.
This is the real difference.
Sandeep thanks for sharing that perspective !
Thanks Manish for the detailed and descriptive information provided for SSA.
This is really very informative and helpful.
You are doing a good work. We appreciate it… Keep it up
Thanks Mukul!
If Interest earned is taxable then PPF is the best and safe option. Safe option as in compared to SIP in mutual funds as well of-course for those who don’t want to take risk.
Sameer
Yes, agreed !
Yes, agreed to your take !
This proves that Government of India will encourage dowry custom and also costly Higher Education, mid day meal or free education up-to 10th or 12th is a (Loli-Pop) Government investment only and Government will reap the crop until the age of 17 and there after for Higher studies, as most of the Institutions are being run by the Indian Rulers and the Politicians. Bureaucracy Zindabad ! Zindabad.
@Y R Suri, suggest you to take a look at the brighter side. It is an absolutely GREAT and respectable initiative taken by the government, helping the girl child in every manner while serving both – proud parents of girl child/children, and not-so-proud guys (pity them!!!). In any case, it is a great way to build corpus for one’s daughter. Expenditures are inevitable, be it a son or daughter, and this is a great tool to give inflation adjusted (or even better) long term returns. There is no need to link it with dowry or educational costs.
It is unjust to blame government like this.
I completely agree with Suri in this case. This scheme seems to encourage the tradition of dowry and nothing else. Why else should this scheme be restricted to girl child only? Higher education you say? Well, that applies to both the boy & girl child, so this scheme could not have been introduced with that in mind which only leaves us with one possible angle….
Shame on the Indian government for promulgating such one sided schemes.
What is dowry? Its distribution of your wealth among children. Sons are given immovable property and daughters are given cash and gold. I would give as much Gold as I can to my daughter in her wedding. But then greedy people doesnt miss any opportunity. Only loosers marry for dowry.
Thanks for sharing your view on this topic Mr. Suri !
Thats a good point Suri , this is what exactly happens in PPF too !
First it was Varishta bima pension, then kisan vikas parta and now sukanya samriddhi account.
This look a a hybrid of RD and PPF.
Anyway thanks for detailed analysis
Welcome !
This is targeting those people who feel overburdened cause of girl’s marriage or education and therefore the locking period. I think its a great initiative and motivates people to exclusively save for their girl child and be little relaxed about the future. PPF, SIP, RD s are all good and meant for those who would anyways want to provide the best to their girls. But for those who had this psychological block that having a girl is a bigger financial responsibility this scheme should help.
A minor error i’d like to point out in the comparison chart. The maximum contribution values are missing from row for “Minimum and maximum contribution”.
Otherwise, great info Manish. Thanks for sharing.
I just realised that, and made the correction . Thanks for pointing it out !
Manish
Thanks for sharing that. I just fixed that !
i have one doubt in this. is it possible to investet different amounts in each year or we need to continue fixed amount what we will deposited in first year.
like
First Year – 100000
Second Year – 10000
Third Year – 50000
Fourth Year – 40000
Phani Kumar
@Phani, that is absolutely allowed. No need for fixed amount each year.
Yes, its possible . the only rule is that minimum is 1000 and max is 1.5 lacs
For a disciplined investor, any investment in ELSS / PPF are good avenues for long term planning depending on their risk profile. It is a very good initiative for a girl child and parents who are very keen to ensure good education and respectable marriage to their daughter, this will be a right fit. In my opinion, it is a good investment opportunity if it is allowed to accumulate till its tenure + maximum investible contribution in this scheme.
Thanks for your comment Jayaraman !
Hi Manish,
Thanks for sharing this information. I understand that the total amount deposited in Sukanya Samridhi account, PPF, ELSS, etc … should not exceed rupees 1,50,000 for taking 80C exemption. Or is there a separate provision for Sukanya Samridhi account to deposit maximum 1,50,000
Regards
Surendra
Hi Surendra,
There is no rule which says that the total contribution under various instruments cannot exceed Rs.1,50,000/-.
I can very well invest Rs.1,50,000/- in my PPF and another Rs.1,50,000/- towards my daughter’s sukanya samriddhi account. Total 3,00,000/-. It is just that my benefit under Section 80C, in that case, will be capped to Rs.1,50,000/-
Hi Manish
This is great information. The interest earned is taxable …as you had said…is taxable under parent income / child income. I mean do clubbing rule will apply here.
If yes..then I think you need to update the graph taking into consideration the taxation part.
Clubbing will surely apply here .
Fantastic article Manish… Thanks a ton!!
From my perspective, difference in interest rate between PPF and this scheme and tax exemption. Looking from that I think, PPF is always better than this scheme since interest rate on this scheme can be lower in future.
SIP in mutual fund or ELSS is anytime BEST 🙂
Yea PPF is overall better . SIP is best !
How do we determine which sip is best?
Rashmi
You cant decide for a fund from a long term point. The best shortcut is to choose a fund with a 4-5 star on sites like Valuesearch or moneycontrol
Very nice comparison chart Manish. This is a good initiative but I think Govt has only thought about those people who don’t have internet access.
I think you should not look at this in that manner. Its just a start . Implementing it all over India is a challenge . Online deposit might be a possibility later, but primarily I think the target is middle and lower income class !
You are right. This is just beginning only. And anyway in long run if this got success, we can see more features. 🙂
Thanks again Manish for detailed information,
I think SIP for 21 years is best options
Regards,
Sagar
Yes, even I think SIP is the best option !
Hi Manish and Nandish,
If we compare PPF and this scheme, parent can invest total of Rs. 150000/- if they have PPF account for parent and their girl child. But in this scheme they can deposit Rs.150000/- in each account (PPF and Sukanya Samriddhi) . In this way they can save Rs.300000/- (PPF + Sukanya Samriddhi) in a year if they have one girl child (not considering 80C limit but just a saving perspective). So they can keep PPF only for retirement and Sukanya Samriddhi amount for their girl 🙂
Regards,
Deepali
Good one 🙂
Thats a good point Deepali
Hi Deepali,
I was also thinking on the same line.
My query is the amount we deposit in Sukanya account do we have to pay taxes on the interest earned every year or that is also exempted. If yes then there is some benefit in this otherwise not.
Thx,
Shalabh
Thanks for this information.
Could you add a similar graph showing the case of money invested in PPF? You could extrapolate the calculation to show what would be the return on PPF hypothetically, if it was extendable for 21 years. This would help readers to compare the two schemes better.
Will do it a bit later.
Hello Manish and Nandish,
Thanks a ton for sharing such a nice and detailed description of this new plan, with various comparison aspects of the “looks like” similar savings options. Glad that government is taking such initiatives towards saving Girl child. Hope more and more people will get awareness from such initiatives. Thanks for bringing it to the forum!!
Regards,
Sucharita
Initiate-wise definitely a great one. But have couple of drawbacks as well. I don’t what is the point if stopping investment after 14 years. If your kid is now 9 year old then you will get only 5 more years to invest.
Santanu,
The limit for depositing till 14 years is from the date of opening account. Not based on child’s age.
Hi Santanu,
That is not true. Stopping the investment after 14 years means 14 years after the account was opened. So for a 9 year old child, you can still invest for next 14 years, until your child becomes 23. Hope this is clear.
Please see my other comment (Comment #16) as well.
Further extrapolating the above statements, I am led to believe that even a 15 year old girl can open an Account for herself, today, and let it go on until she turns 36 (21 years from today).
Jay/Santanu….
“You can deposit the money in the account only for the 14 yr period, from the date of opening”, so 14 years is correct; whereas 36 seems to be wrong. As maturity is 21 years age of the child.
Santanu’s case as his daughter is 9, he has got 12 years I guess.
@vluday, this is not correct. The maturity is 21 years after the account was opened. So if I open the account in year 2015, for my 9 year old daughter, maturity would be 2036 (which is when she turns 30).
This is therefore independent of the age your child attains.
Please go through the PDF link posted by Manish, which states these rules.
Thanks everyone, i took it wrongly.
To clarify it a bit, maturity of the account happens 21 years after the opening of the account, same way deposit for 14 years from the time of opening of the account. Nothing to do with the age of girl child here… Only thing where the age matters is opening of the account which is restricted to the age of 10 (grace period of 1 year in 2015 only). So the perception of 15 years and the account going on till 36 is wrong.
Actually this is a shameful initiative by the government in my opinion. When will the government realize that reservation and quotas never work? This scheme may not sound like it, but its nothing but another glorified form of reservation or quota (say what you may) that only benefits a portion of society and not entire society.
Indian society can only evolve when all such quotas and schemes that only benefit one portion of society is completely abolished. Laws, policies and scheme purported by the government should be such that it benefits all sections of society and true equality is promoted by giving equal benefits to all.
Do you really think this is the right way to save a girl child? Government has to analyze why people don’t want a girl child first and then bring reforms to eradicate those barriers. Just dangling the financial carrot in front of people via such scheme will not do anything to change people’s mindset in the long run.
Thats a good perspective Anjan.
I personally disagree with Anjan, but that’s okay to have a difference of opinion, so won’t argue further. I personally see “financial carrot” as one of the means, among other efforts, and certainly not the “only mean”. We can see it as a good attempt by the government.
If you need a financial carrot as an incentive to love & care for your girl child, then it only strengthens my argument. This kind of mindset does nothing to take our society forward. Its like a short term band-aid to stop the flow of blood but the disease still remains.
Ah, looking from that perspective may be you are correct. Being a very proud father of a daughter myself I have been deeply saddened by the heinous acts in our country. But I see your perspective now.
I respect your view but at the same time, I would see this as an opportunity given to save in a government scheme ( relatively lesser risk ) for a girl child when you have exhausted the PPF limit.
If we talk about inequality, then how do you see higher interest rates being paid to Senior Citizens ?
I agree with Anjan.
I too feel its a sick policy.
Because of the following points
1) This is like forcing/planting-in the people’s mind to show in-equality between boy and girl child. Why do you need to save separately for girl child? Are you telling that the girl child is a burden?
2) I feel this is going to be slowly a dowry-save-instrument.These kind of concept based (NOT POLICY) strengthens the dowry system.
3) By this, the govt is telling that it is very expensive to raise girl child.
Agreed
I agree with Jay’s perspective
(while still appreciating the thoughts of Anjan as he made a very very relevant point).
I agree with Jay’s perspective
this is good for fature
Welcome .. Glad to know that Ramesh ..
Hi Anjan,
I totally agree with you government is more interested in their Liquidity.
Its 14 yrs from the date of opening the account .
Thanks for sharing this information. Good part of the scheme is you can have one account per child (beneficial if you are parent of two girls) and also you cant withdraw before 18 yrs or 21 yrs of the account holder.
Yea . Thanks for your comment Kiran !
SIP in ELSS is still the best … don’t know its EEE or ETE but above said scheme has good emotional comoulsion & less liquidity that’s why it is more likely shall be carried to 21 years
Yes Anuj
For that big term, Even I am inclined towards SIP personally . BUt a lot of people do not want equity in their portfolio, especially for their kids education goal !
Hi Manish
This is a detailed analysis worth sharing. I also agree that the scheme doesn’t seem to have much more benefits vis-a-vis PPF. Its aimed to have a psychologically motivate people as in our society people still distribute laddoos when a boy is born and refuse to eat food if a girl is born in the family. i think this account is aimed to encourage people in that way which is good.
Yes thats correct Rachna !
Excellent first hand information and comparison table as always. Hope this comes about with all the hiccups ironed out after a few months as you suggested.
Welcome Vaz !