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The Government of India introduced the Sukanya Samriddhi Yojana to offer financial coverage to a girl child. This savings scheme can be opened and operated by the parents or legal guardians of a girl child aged 10 years or below.
Parents are not only able to finance the education and marriage expenses of their daughters but also avail tax benefits through this government-backed scheme.
The interest rate of Sukanya Samriddhi accounts is as attractive as fixed deposit rates in India. Depositors can take the assistance of an online monthly interest calculator to estimate the annual returns and the maturity amount.
Income tax benefits on Sukanya Samriddhi savings scheme
In order to encourage individuals to invest in the Sukanya Samriddhi savings policy, the Government of India has enrolled several tax exemptions in this scheme, which are –
- For an SSY account, the accrued interest is compounded annually; the annual income from such interest is exempt from taxation.
- The invested amount in an SSY account, when withdrawn on maturity or on closing this savings account, is also exempt from taxation. This ensures that the girl child can utilise the maturity amount in its entirety without worrying about paying tax.
The Government of India has also made sure that both the depositor and the beneficiary can enjoy the above tax benefits; they can utilise the funds without having to worry about taxation.
It should be noted that your investments made towards an SSY account are eligible for income tax deductions as per Section 80C. This tax exemption is subject to a maximum limit of Rs.1.5 lakh in this scheme.
Parents of a girl child can take the assistance of a monthly interest calculator for SSY to check if the annual income earned is taxable or not.
Eligibility criteria on this tax deduction
The SSY savings scheme allows only one depositor to invest funds on behalf of a girl child. In order to be an eligible depositor of this sayings account, you are required to be a parent or a legal guardian of the girl child.
Only that depositor will be able to claim tax deductions as per Section 80C. This indicates that even though both of the parents (or legal guardians) of a girl child can deposit money in the Sukanya Samriddh savings account, only one of them can claim the above-discussed tax exemptions.
Other benefits of Sukanya Samriddhi Yojana –
- Easy application process
Applicants can make use of an easy online application process in order to open a Sukanya Samriddhi Yojana account.
- Affordable minimum deposits
As a parent or legal guardian of a girl child, you can open this account with a minimum depository amount of Rs.250 and a maximum of Rs.1.5 lakh.
- Attractive rates of interest
Similar to several other fixed deposit rates in India, this account offers substantial potential in generating a high return on investment.
The Sukanya Samriddhi savings account offers an interest rate of 8.50%, which is compounded and credited annually to build a substantial maturity amount.
- Premature withdrawal
A girl child can withdraw funds from the Sukanya Samriddhi account before account maturity, only if she is 18 years old or above and requires financial assistance for her wedding or to pursue higher education.
In case of investment plans like fixed deposits, the lock-in period varies from 1 to 5 years, which is comparatively shorter than SSY accounts. NBFCs like Bajaj Finance also offer one of the highest FD rates in India that helps in generating a substantial corpus over time. You can streamline your financial plans with the help of an online FD calculator.
- Multiple payment methods
Depository payments in the SSY account can be made with the help of cash, net-banking, credit/debit cards, cheque, demand draft, etc. You can also set standing instructions on other savings account to make automated deposits in the Sukanya Samriddhi account.
Moreover, the use of monthly interest calculators, which has a similar working principle as the online fixed deposit calculator, provides additional assistance in dealing with your finances with ease.
Investing in SSY is one of the ideal ways to save for a girl child. Parents or guardians only have to make sure that they will be able to invest in such accounts for the required duration.
Author Bio:
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at HighlightStory
