The novel sukanya samriddhi yojana (ssy) envisaging financial security for girl child launched by modi government has been one of most attractive small savings scheme. thusfar, over 76 lakh account have opened accounting rs 3,000 crores. however, off late scheme undergone a few tweaks. with this, also addressed some ambiguities which were prevalent in original rules scheme.
Following are some of the details that need to be kept in mind while opting for SSY
Opening of Account: This account can be opened for maximum two girl children in a family. A Parent or a legal guardian is eligible to open an account in the name of the girl child anytime from her birth till she attains the age of 10 years. This provision, now, has been extended to include even adopted daughters.
Eligibility: The girl child strictly has to be an Indian resident throughout the tenure of the scheme. Incase if the residency status of the girl child changes in the interim, no interest shall be payable from the date of change and the account will be closed prematurely.
Tenure: Deposits now can be made for a total of 15 years from the date of opening the account. Earlier it was 14 years.
Mode of Investment: Apart from cash and cheque, deposits can also be made electronically if the bank or post office has access to the facility of core banking solution.
Interest Rate: Interest rates associated with SSY will be reset every quarter, similar to other small savings scheme. Accordingly, till June 2016, these deposits will be earning 8.6% as compared to 9.2% during 2015-2016.
For the purpose of interest computation every month, the lowest account balance between 10th and the end of the month, will be considered. In effect, the amount deposited after the 10th will not earn any interest for that month.
Quantum: The minimum investment to be made is at Rs 1,000 and maximum investment remains capped at Rs 1.5 lakh a year. Any excess amount deposited will not earn any interest. Additionally, such an excess amount can be withdrawn anytime.
Penalty in case of non-maintenance: Incase if the minimum investment of Rs 1,000 is not deposited every year, then the account will be considered to be in default. If this 'in default' status continues for 15 years, the amount deposited shall attract an interest rate equivalent to the Post Office Savings Account interest rate which is currently at 4% per annum.
Incase if the default is due to the death of the guardian of the Account holder who opened the account, then such an account will continue to attract the interest rate notified by the Government.
Regularising default account: By paying a fine of Rs 50 for each year the account has been in default along with such minimum specified amount for the year or years of default.
Tax: The amount invested is eligible for deduction under Section 80 C and follows Exempt-Exempt-Exempt (EEE) tax regime
Maturity: The account will mature on completion of 21 years and no further interest will be accrued even if such an account is not closed. Earlier, interest accrual was till the time the account was closed.
Additionally, in earlier rules, the account could be deemed closed at the time of marriage of the girl child. However, in the new rules, the account can be very well be continued till the age of 21, even if married in the interim.
Transfer of account: The account can now be switched between banks and post office and vice versa by payment of Rs 100 as fee. Incase, the switching is due to change of residence, then a proof of change of residence needs to be submitted and no fee will be charged.
Withdrawal: Earlier, one could withdraw 50% of the accumulated amount for education purpose, provided the girl is 18 year of age or passed Std10th. Now, the withdrawal will be allowed on the basis of the actual fees payable. It can either be withdrawn as a lump sum or in course of five annual installments.
In case of marriage, the accumulated sum can be withdrawn one month before or three months after the date of marriage. At that time, it is imperative to provide age proof inorder to prove that the child is not below 18 years of age.
Pre-mature closure: Earlier premature closures would be allowed at any point in time. However, now it is not allowed now before the completion of five years. But redemption is allowed in cases of extreme compassionate grounds such as medical support in life-threatening diseases of the Account holder or death of the guardian. In such instances, interest paid will be equivalent to post office savings.
Documents at the time of closure: Application for account closure, proof of identity, residence and citizenship
Despite all these changes, financial planners are of the view that SSY continues to remain one of the most attractive debt scheme when it comes to saving for a girl child. Even though there are multiple other options available in the market in the form of mutual funds, SSY triumphs when it comes to tax efficiency and predictability, making it an attractive option for a conservative investor. Not only is the interest rate offered higher than fixed deposits, the gains accumulated over the years are also tax free.
According to Suresh Sadagopan, Certified Financial Planner, investing 1.5 lakh per year in SSY makes sense even for a person from the 30.9% tax bracket, as there is no clubbing of income.