Sukanya Samriddhi Account Yojana SSY
The Government of India has implemented a slew of social security measures in recent years, some of them are aimed at specific sections of the demography, while some of them have a universal appeal. Sukanya Samriddhi Yojana is one such scheme which has gained mass appreciation from all quarters. The scheme which is aimed at providing financial security to the girl child for her education and marriage seems to have resonated with parents and guardians across the country, making this scheme one of the more popular ones.
Sukanya Samriddhi Scheme has been started under the flag of Beti Bachao, Beti Padhao Yojana by the Central . And other women oriented schemes like Surakshit Matritva Scheme and Scheme for the Pregnant Women also have been started by Central Government, as a big step for women or girl child of the country .
As can be easily understood, the scheme is aimed specifically at the girl child in India, and no other person can benefit from a Sukanya Samriddhi Account and consequently the scheme. It should be noted that the definition of a girl child is also clearly defined, thus not every minor female can enjoy the benefits of this scheme. Only girls who have not attained the age of 10 can have a Sukanya Samriddhi account. However in the year of its implementation i.e. 2015, a leeway of 1 year was given by the government so that girls who were no more than 11 years old as on 2nd December 2015 were allowed to open accounts in their names.
It should be noted that the scheme is applicable only to resident Indians thus Non resident Indians cannot apply for this scheme.
KEY FEATURES OF THE SCHEME
Opening an account
An account under the Sukanya Samriddhi Scheme can be opened with as little as Rs.1000 only. Also deposits can be made in the account by a single person only and these deposits are to be made in round figures that are multiples of hundred with the lowest deposit that is allowed is of Rs. 100.
Deposits in the account
Even though there is no restriction on the number of deposits that can be made by the parent or guardian in the account in 1 year, the amount so deposited should not exceed Rs. 150000 in aggregate in a single year.
Maturity of the account
The account opened under this scheme is valid upto 21 years from the date of opening. However this is the maximum limit, and if the girl child on attaining maturity gets married before the completion of 21 years then the account can be closed.
Out of the 21 years that an account under this scheme is allowed to exist, deposits are accepted for the first 14 years only. After the period of 14 years no deposits shall be accepted, however interest is credited until the termination of the account.
Rate of interest
The interest on the amount deposited in the account is compounded annually at a rate which is declared every fiscal year. Thus there is no fixed rate of interest that has been declared under the scheme and the same changes every year. However by relying on past figures it can safely be said that the interest rates have been significantly higher than normal savings bank accounts.
Premature closure and withdrawal of the accounts
Sukanya Samriddhi accounts can be closed prematurely and the amount withdrawn by persons other than the girl child, i.e. the parent or guardian, in case of the demise of the girl child in whose name the account has been opened. In such circumstances on production of the requisite documents the amount held in the account shall be released to the parents or guardians along with the interest credited on the amount. The other instance when premature closure may be allowed is if the government is convinced that circumstances exist such as life threatening medical emergencies etc. and the operation of the account is proving to be extremely burdensome and harsh on the depositors, i.e. the parents of the girl child or her guardian, then the Central Government may allow the closure of the account once it has been proved that the alleged circumstances do actually exist.
Other salient features of the account
- The amounts in the accounts can only be deposited by a single person, which means one of the parents can be the depositors or in the instance that the girl child does not have parents or they are incapable of operating bank accounts for any reason, then the person who is designated by law as the guardian of the girl child shall be the depositor.
- Each girl child can only have one account under this scheme, thus having multiple Sukanya Samriddhi accounts in different banks for the same person is not allowed. Additionally a household can have a maximum of 2 Sukanya Samriddhi accounts.
- The account is operated by the girl child to whom the account belongs. No other person is allowed to withdraw any money from the account other than the girl. The entire amount in the account can be withdrawn by the girl child once the account has matured. However once the girl has attained the age of 18, she can withdraw upto 50 percent of the available balance for higher studies or marriage. It should be noted that this withdrawal is allowed only after the girl child reaches maturity at 18 years of age and before she attains 21 years of age. Otherwise the withdrawal of 50% shall not be allowed.
- The accounts are transferable anywhere in India, thus if the girl child has to move or change her place of residence due to work, education etc. then she can transfer her account to wherever her present location is by simply furnishing an address proof.
- All account holders under this scheme shall be given a passbook. This passbook shall contain all the details of the girl child in whose name the account has been opened including details of the depositor and other relevant details. The passbook, which serves as a way of keeping track of all transactions in relation to the account also serves another very important purpose. At the time of withdrawal the passbook is one of the most important documents to prove the authenticity of the claim of the account holder and has to be furnished at that time.
HOW TO ENROLL FOR THE SCHEME
A number of post offices and nationalized banks have been roped in to implement this scheme. SBI being the largest bank in the country, it is quite obvious that most of the accounts shall be opened in SBI. The procedure for opening an account has been kept simple and hassle free, anyone who wishes to open an account needs to visit any SBI branch along with a few documents and they can open an account for their girl child under this scheme. The documents required are basic documents such as the birth certificate of the girl child as an age proof, any document which acts as an address proof of the parents or guardian of the girl child and the address proof should also be accompanied by a photo identity proof of the parents or guardians.
The girl child doesn’t even need to be present during the opening of the account in her name.
BENEFITS UNDER THE SUKANYA SAMRIDDHI SCHEME
The primary objective of social security schemes is to provide benefits to the population, if these schemes are not beneficial to society then there is simply no reason for implementing such schemes. Thus benefits are the main objective of such schemes and consequently the various benefits of the Sukanya Samriddhi Scheme are:
The scheme makes no bones about being aimed squarely at the girl child, thus it goes without saying that the benefits under this scheme shall also accrue to the girl child. However the government realised that for the scheme to succeed it is the parents or the guardians who need to be provided some incentives, so that those incentives can induce them to get their daughters registered under the scheme.
The scheme provides a host of benefits in the form of deductions under section 80C of the Income Tax Act 1961 to the depositors. In general, section 80C allows deductions of certain amounts from the total taxable income i.e. the income on which the income tax rate shall be applied to calculate the amount of income tax payable, consequently this deduction reduces the amount of taxable income of the assessee which in turn results in the decrease of the assessee’s income tax liability. Deposits made to Sukanya Samridhhi Yojana fall under section 80C, and are thus allowed as deductions under the same section. For those not well versed in taxation matters should pay close attention to the fact that deduction under Section 80C is allowed only upto Rs. 150000 and not beyond that.
However these tax sops are not designed to benefit only the depositors, in a move which is being lauded for truly empowering women and making them financially independent, the government has declared that the interest credited under this scheme shall be tax free, and even the principal amount shall not be taxable. Thus the women who withdraw any amount from their Sukanya Samriddhi accounts shall not be required to pay any tax irrespective of the amount withdrawn by them or contained in the account.
Other than the tax benefits the scheme also provides a host of other benefits such as:
- The interest rates under this scheme though not fixed is kept very high as compared to the interest rates offered by normal savings banks accounts. If we see the rate of interest for the year 2014-15, it was 9.10%. The next year i.e. 2015-16 the rate was increased to 9.20%. The following year the rate was reduced to 8.60% which is still very high when we compare it to a normal savings bank account which offers an interest rate of 4%-6%. Since the funds remained locked in for a significant amount of time, the high interest rates with which the amount is compounded shall ensure a hefty payout on maturity.
- The other big benefit of this scheme is its strict rules regarding the operation of the accounts, especially in relation to withdrawal of money from the account. The amount can only be withdrawn by the girl child to whom this account belongs and by nobody else. There are exceptional circumstances where the amount can be released to the parents or guardians of the girl child but those are under the most extreme and rare circumstances. Barring which, nobody except the girl child can operate the account or make withdrawals. This goes a long way in protecting the money from misuse and to ensure that the money goes to its rightful owner i.e. the account holder.
- Another important advantage that the Sukanya Samriddhi Scheme provides is one which is often overlooked but is vital nonetheless, and that advantage is the flexibility in deposits that this scheme affords. The scheme has defined the minimum and maximum limit that can be deposited in the account per year but apart from that there is no limit to the number of deposits in a year or any strict time period to adhere to. Thus the depositors can deposit money as and when it is convenient for them. This goes a long way in alleviating the pressure that comes with maintaining such schemes generally.
Drawbacks of the scheme
Nothing in life is perfect and the same goes for schemes crafted by the government. Thus there are some drawbacks associated with the Sukanya Samriddhi scheme. The more pertinent among them are:
- The Sukanya Samriddhi Scheme with its lock in period of 21 years, is not to everyone’s taste. A time period in excess of two decades is not a small amount of time by any stretch of imagination and many investors shall balk at the same. Being able to think 20 years ahead into the future is an ability in itself which only the most far sighted individuals possess. On another note, for a person of small means this huge time period may seem particularly forbidding as tying up hard earned funds for such a long period may not be feasible for them.
- The floating interest rates are another cause for concern for many depositors and account holders, as many are of the thought that the high interest rates being declared by the government are only being done for promotional purposes and once the high interest rates have served their purpose it is feared that they shall be slashed.
- Another major bugbear of this scheme is its limitation of upto two daughters per household being able to hold Sukanya Samriddhi accounts, this seems especially unfair in households with 3 or more daughters as it effectively requires parents to choose between their daughters. Also this limitation goes completely against the whole objective of the scheme which is to promote the girl child.
- With the increasing push for a digital India it is baffling that online services for this scheme are nonexistent. The scheme requires the concerned persons to physically go to the bank for any transaction, and in an increasingly online world this decision seems all the more absurd.
Points to note
- It has been made clear that any account under the Sukanya Samriddhi Yojana shall be a fresh account, which means that no existing accounts can be converted into Sukanya Samriddhi accounts. Thus people are advised not to insist on the same as all such applications shall be denied.
- Three daughters can have Sukanya Samriddhi accounts only under the following circumstances:
- If the first born is a daughter and the second born are a set of twin daughters
- If the first born are a set of triplets, and they all happen to be girls.
Other State also started Udyami Sakhi Mandal Yojana for backward class women in Jharkhand and Kanyashree Yojana For Girls In West Bengal.