Parents are always worried about the financial security of their girl child. The traditions and customs of our country demand substantial expenditures on the girl’s marriage. The financial burden of marriage feels more burdensome when the gap between a girl’s higher education and her marriage is within a few years. Considering this, the government has taken up various measures to promote education and financial freedom for the girl child. Sukanya Samriddhi Account (SSA) is one such government scheme to help parents save for the education and marriage of the girl child from her birth itself.
The Sukanya Samriddhi Account is designed to provide a bright future for the girl child. The account offers a higher interest rate along with tax benefits. Government has withdrawn previous Sukanya Samridhi Account rules with immediate effect. Now, the government has notified the new scheme w.e.f. 12th December 2019.
Here, we have covered salient features of the SSA scheme effective from 12th December, 2019.
- Who can open SSA account?
The account may be opened by one of the guardians in the name of a girl child, who has not attained the age of 10 years as on the date of opening of the account. Every account holder shall have a single account under this Scheme.
- How to open an account in SSA?
The application in Form-1 for opening an account shall be accompanied by birth certificate of the girl child in whose name the account is to be opened, along with required documents of the guardian.
- Who can operate this account?
The account shall be operated by the guardian till the account holder attains the age of 18 years. The account shall be operated by the account holder herself after reaching the age of 18 years by submitting necessary documents.
- How much amount to be deposited for account opening?
The account may be opened with an initial investment of Rs. 250 and in multiples of Rs. 50 after that.
- Can one claim a tax deduction of deposit in SSA?
The investment made in Sukanya Samriddhi Scheme is eligible for deduction under Section 80C of the Income-tax Act.
- What is the tax treatment of interest earned on this scheme?
Sukanya Samriddhi Scheme falls under the EEE (Exempt, Exempt, Exempt) tax category, which means an investor is not liable to pay tax at all three levels, i.e. – deduction available at the time of investment, no tax at the time of earning and no tax at the time of withdrawal. Any amount withdrawn from the account is exempt from tax under Section 10(11A).
- How many accounts can be opened in Family?
Account under this scheme can be opened for a maximum of two girl children in one family. Here, family means a unit consisting of a person and his spouse (either alive or deceased) and their children adopted or otherwise.
However, in the following cases, the account can be opened for more than two girl children provided the guardian submits an affidavit supported by the birth certificate of all the girl children:
- The first order of birth resulted in triplets, and all the children are girls; or
- The second order of the birth results in two girl children and the first order also was the birth of a girl child. However, this exception shall be applicable if the first order of birth results in two or more surviving girl children.
- What is the minimum amount to be deposited in the account?
Minimum total deposit to be made in the account during every financial year shall be Rs. 250 and in multiples of Rs. 50 after that.
- What if someone doesn’t deposit a minimum amount?
An account in which the minimum amount has not been deposited shall be considered as an account under default. Such an account may be regularised any time till completion of a period of fifteen years from the date of opening of an account on payment of a penalty of fifty rupees for each year of default along with the minimum annual deposit in respect of the defaulted years.
- What is the maximum amount that can be deposited in an account?
Total amount deposited in an account shall not exceed Rs. 150,000 during a financial year. However, if due to an error, the deposit in the account exceeds Rs. 150,000, then such excess amount shall be refunded to the depositor and no interest will be awarded on such excess amount.
- What is the rate of interest on deposits?
Interest on deposits made under this scheme shall be provided at the rate of 8.4% per annum. Interest shall be calculated for the calendar month on the lowest balance available in the account between the close of the 5th day and last day of the month.
- When is interest credited to the Account?
The interest shall be credited to the account at the end of each financial year. Any amount of interest in fraction of a rupee shall be rounded off to the nearest rupee and for this purpose amount of 50 paise or more shall be treated as one rupee and any amount less than that shall be ignored.
- What is the tenure of account?
The amount may be deposited in the account till completion of a period of 15 years from the date of opening of the account. However, the account shall mature on completion of 21 years from the date of its opening.
The account shall be deemed to have been matured on completion of 21 years from the date of opening of the account or if the account holder is getting married and furnishes a declaration signed on non-judicial stamp paper attested by the notary supported with proof of age confirming that the applicant will not be less than 18 years of age on the date of marriage. No such closure shall be allowed before one month from the date of the intended marriage or after three months from the date of marriage.
- Can there be pre-mature closure of an account?
The account opened under this scheme can be closed before its maturity by submitting Form 2, in any of the following circumstances:
- The account can be closed before its maturity in the event of the death of the account holder. Interest for the period between the date of death of the account holder and date of closure of the account shall be paid at the rate applicable on Post Office Savings Account for the balance held in the account.
- The account may be closed where the accounts office is satisfied that in case of extreme compassionate grounds such as medical support in life-threatening diseases of the account holder or death of the guardian that the operation is causing undue hardship to the account holder. The closure shall be allowed after complete documentation of the grounds of closure. However, no premature closure shall be allowed before completion of 5 years from the date of opening of the account.
- Can one make a withdrawal for the education of a girl child?
On an application in Form-3, the withdrawal shall be allowed for the education of the account holder. Withdrawal can be requested earlier of the (a) when an account holder has attained the age of 18 years or (b) has passed 10th standard. The application for withdrawal shall be accompanied by a documentary proof in the form of a confirmed offer of admission of the account holder in an educational institution or a fee-slip from such institution indicating such financial requirement.
Withdrawal can be made lower of the following:
- 50% of the amount in the account at the end of the financial year preceding the year of application for withdrawal; and
- The actual requirement on account of fee and other charges required at the time of admission as shown in the offer of admission or the relevant fee-slip issued by the educational institution.
The payment in such case may be made in a lump sum or maximum of five-yearly instalments.