Sukanya Samriddhi Account or Girl Child Prosperity Scheme is a special deposit scheme launched by Prime Minister Narendra Modi on 22 January 2015 for girl child. Under the scheme an account can be opened by the parent or legal guardian of a girl child of less than 10 years of age with a minimum deposit of Rs 1,000 in any post office or authorised branches of commercial bank.Under the scheme, an interest of 9.1 per cent is provided. The account will remain operative for 21 years from the date of opening of the account or till marriage of the girl child . Partial withdrawal up to 50 per cent of the account balance is allowed to meet education expenses of the girl child till she attains 18 years of age. This article explains in detail the Sukanya Samriddhi account, what are features of the scheme, how to open account, tax, how it compares with PPF.
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Sukanya Samriddhi Account
What is Beti Bachao, Beti Padhao Scheme? Beti Bachao, Beti Padhao (Save girl child, educate girl child) is a Government of India scheme that aims to generate awareness and improving the efficiency of delivery of welfare services meant for women. The scheme was initiated with an initial corpus of Rs 100 crore. According to census data, the child sex Ratio (0-6 years) in India was 927 girls per 1,000 boys in 2001, which dropped to 919 girls for every 1,000 boys in 2011. A 2012 UNICEF report ranked India 41st among 195 countries.
Who can open the Sukanya Samriddhi Account?
This account is specially meant for a girl child less than 10 years old and comes under small savings scheme. Natural or legal guardian can open only one account in her name. Account can be opened from the birth of the girl child till she attains the age of ten years. As this scheme was announced in Jan 2015 if the child turned 10 any time between December 2013 and December 2014 ie born between Dec 2003 to 2004, you can still open account in her name. Guardian of the girl child will be allowed to open and operate accounts of maximum of two girl children except in the case where they have twin girls the second time or triplets( three girl children). One can open account for girl born after Dec 2003.
NRI and Sukanya Samriddhi Yojna account
Can NRI parent open the Sukanya Samriddhi Yojna account?
Sukanya Samriddhi Yojna is governed by Post office Small Savings Scheme rules and NRIs are NOT eligible to invest in such schemes. It has been clarified under the scheme that account can be opened for child with Resident Indian citizen status only. NRI, OCI and others cannot open account. Further when the citizenship status changes, account will be discontinued.
What happens when the resident child becomes NRI?
As per the Government notification in Mar 2016, upon a beneficiary changing citizenship or residential status, the account will earn no interest. It will be deemed to be closed prematurely. The excerpt from the notification is shown below
How much can one deposit in Sukanya Samriddhi Account and for how long?
The initial deposit is Rs. 1,000 and then in multiples of Rs. 100. You can make deposits for 14 years from the date of opening of the account. You can deposit varying amounts in a month or year. In a financial year(Apr- Mar)
- Minimum deposit is Rs 250(from 1 Oct 2018 before that it was Rs 1000). Failure to deposit Rs 1000 a year will cost Rs. 50 in penalty.
- Maximum Deposit : Total deposit should not exceed Rs 1.5 lakh.
- The deposit shall be made by cash, cheque or demand draft. (No online)
Please Note: You can only deposit for 14 years from the day of opening account. From 14 years – 21 years you cannot deposit. But government will pay interest on the amount accumulated (till 14 years) till closure of account.
14 years means 14 years from the day of opening of account. So if your daughter is 7 years old when you open the account then you have to deposit till she becomes 21 years old. Account will mature when she will be 28 years. But if she gets married after she becomes 18 years and 28 years, in our example, the account will close.
On opening an account, the depositor will be given a pass book bearing the date of birth of the girl child, date of opening of account, account number, name and address of the account holder and the amount deposited. One needs to take passbook at the time of depositing money in the account and receiving payment of interest and also at the time of final closure of the account on maturity.
When will the Sukanya Samriddhi account mature or close?
The account shall mature after twenty-one years from the date of opening of the account. If the girl gets married before completion of twenty one years, the operation of the account will not be permitted beyond the date of her marriage. An affidavit also has to be provided to the effect that girl is not less than eighteen years of age as on the date of closing of account. In the unfortunate event of the child dying, the account will be closed immediately and the balance will be paid to the guardian of the account holder.
Can one withdraw from Sukanya Samriddhi account
Withdrawal before the daughter turns 18 is not allowed. Partial withdrawal,50% of the total amount,is allowed when the account holder turns 18 or when she passes 10th standard or attains 18 years of age, whichever happens first, for financial requirements such as education or marriage.
How much can one accumulate by investing in Sukanya Samriddhi account?
Assuming you open the account the moment you girl child is born and if you invest the maximum permissible amount Rs 1,50,000 per year for 14 yrs. By the time girls turns 18 years you will have 55 lakhs. At 21 years you will have approx amount of Rs 72 lacs. (Assuming interest rate remains 9.1%). Note: You can deposit varying amounts. If you make a monthly deposit of Rs 1000 for 14 years then on completion of 21 years you will get 6.4 lakh. The breakup is shown below. For monthly deposit of Rs 2000 you will accumulate 1,214,257 Rs. For monthly deposit of Rs 20,000 you will accumulate 12,142,565
How does Sukanya Samriddhi account compare with existing schemes like PPF?
It is easy to relate to scheme as the purpose is clear save for your daughter. It is better than the children insurance plan. Before opening account you should consider :
Liquidity : You have to contribute till 14 years from the date of opening of account. Account closes only after 21 years from the date of opening of account or when daughter gets married (after she becomes 18 year). You can only withdraw up to 50% for the girl’s higher education and marriage after she becomes 18 years old.
Tax on interest:
At present interest earned on Sukanya Samriddhi account is taxable in the hands of guardian and a deduction of Rs. 1,500 is available. Our article Clubbing of Income talks of how income of Minor child is clubbed with that of parent. Interest earned on Sukanya Samariddhi account is tax free. In Budget on 28 Feb 2015 the restriction of interest being taxable was removed.
Mode of Deposit: Cash/Cheque/ Demand Draft/ Transfer/ online transfers through internet Banking . SIP : Standing Instructions can be given either at the Branch or set through Internet Banking for automatic credit to Sukanya Samriddhi Account .
Transfer of funds to accounts standing in CBS enabled Post Offices through NEFT (National Electronic Fund Transfer) / ECS (Electronic Clearance Services) / RTGS (Real Time Gross Settlement)
No online Mode of deposit : The deposit can be made by only by cash, cheque or demand draft. No online facility. The account may be transferred anywhere in India if one shifts from the place where the account stands.
PPF: If you look at the features of this scheme then this scheme is similar to PPF. While PPF is open for anyone Sukanya Samridhi scheme is dedicated to girls. You can open this account if you have exhausted your PPF limit(1.5 lakh for self + child). Though you will not get tax benefits, but you can still save more money for your daughter. Our article PPF Account for Minor and Self explains about opening of PPF account for child.
What if something happens to the parents or one cannot contribute then?
Under special circumstances, legal guardian of the child would be required to make a request to prematurely close the account and withdraw the amount. Some legal formalities would be required like producing death certificate etc. Quoting from Govt. Gazette
(1) In the event of death of the account holder, the account shall be closed immediately on production of death certificate issued by the competent authority, and the balance at the credit of the account shall be paid along with interest till the month preceding the month of premature closure of the account, to the guardian of the account holder.
(2) Where the Central Government is satisfied that operation or continuation of the account is causing undue hardship to the account holder, it may, by order, for reasons to be recorded in writing, allow pre-mature closure of the account only in cases of extreme compassionate grounds such as medical support in life-threatening diseases, death, etc
Interest of Sukanya Samriddhi account
What about Interest on Sukanya Samriddhi account?
- It will be set every year just like other Government schemes PPF, NSC. The interest rates notified under the scheme are as under:
Financial Year Rate of Interest Min Amount 2014-15 9.1 % 1000 01.04.2015 to 31.03.2016 9.2 % 1000 01.04.2016 to 30.09.2016 8.6 % 1000 1.10.2016 to 31.03.2017 8.5% 1000 01.04.2017 to 30.06.17 8.4% 1000 01.07.2017 to 31.12.17 8.3% 1000 01.01.2018 to 30.09.18 8.1% 1000 01.10.18 to 31.12.18 8.5% 250
- Interest will be compounded yearly. Method of calculation of interest will be similar to the Public Provident Fund (PPF). PPF interest is calculated monthly on the lowest balance between the end of the 5th day and last day of the month, however, the total interest in the year is added back to PPF only at the year-end
- The Interest earned is also tax free.
- Interest at the rate, to be notified by the Government, compounded yearly shall be credited to the account till the account completes fourteen years.
How will the interest be calculated on Sukanya Samriddhi account?
Method of calculation of interest will be similar to Public Provident Fund (PPF). PPF interest is calculated monthly on the lowest balance between the end of the 5th day and last day of month, however the total interest in the year is added back to PPF only at the year-end. Interest calculation for an year when monthly addition is Rs 1000 is shown in table below. Our Sukanya Samriddhi Calculator can be used to get approximate maturity value.
|Interest =9.1 % p.a|
|Monthly Interest=9.1/1200||=0.007583333333||Interest=(Opening Balance + Monthly addition)* monthly interest|
|Month||Opening Balance||Monthly Addition||Interest|
Because of the way of calculation of interest on Sukanya Samriddhi account it would matter if you deposit in beginning of month or all contribution in beginning of year (just like PPF)
If you deposit Rs 1000 in beginning of every month then you would get 6,07,128 but if you deposit 12,000 in Apr every year then you would get 631,261 i,e a difference of Rs 24,133.
More the contribution more would be the difference. For example If you make monthly investment of Rs 10,000 in 21 years you will get around 60 lakh 60,71,283.
If you make yearly contribution of (in Apr every year) Rs 120000 in 21 years you will get Rs 63,12,607. The Difference is of 2,41,324.
How much would you earn in Sukanya Samriddhi
If you invest a fixed amount yearly then approximately that you get after 21 years at 8.5% is shown in the table below
|AnnualAmount Invested||Amount Invested||Balance after 14 years||Balance after 21 years|
Tax and Sukanya Samriddhi account
What about taxation and Sukanya Samriddhi account
The taxation on scheme comes under EEE which means Exempt on deposit,Exempt when account is functional and exempt on closing. So Sukanya Samriddhi account is just like PPF. Our article Taxation of investments : EEE, ETE, TEE.. explains EEE, ETE etc in detail
- The amount deposited towards Sukanya Samriddhi Account is deductible under section 80C . 80C has limit of 1.5 lakh rupees and also includes other deductions like EPF,PPF. Our article Choosing Tax Saving options : 80C and Others covers 80C in detail.
- No tax will be levied on the interest amount.
- No tax will be levied on the maturity amount.
Opening Sukanya Samriddhi Account
Where to open the account and what is the process?
You will be able to open this account in a post office or an authorized bank branch. Form can be downloaded from RBI website here. Sample of passbook can be checked out also at RBI webpage here. At time of opening of account one has to provide
List of Banks which have been authorised to open Sukanya Samriddhi Account :
RBI circular dated 11-Mar-2015 on Sukanya Samriddhi Account clarified the banks which are entitled to open Sukanya Samriddhi account. It is not clear whether all branches will open the account or there will be some dedicated branches which will allow open Sukanya Samriddhi Account. Other than public sector banks there are private banks like Axis Bank, HDFC Bank and ICICI Bank.
- State Bank of India
- State Bank of Patiala
- State Bank of Bikaner & Jaipur
- State Bank of Travancore
- State Bank of Hyderabad
- State Bank of Mysore
- Andhra Bank
- Allahabad Bank
- Bank of Baroda
- Bank of India
- Punjab & Sind Bank
- Bank of Maharashtra
- Canara Bank
- Central Bank of India
- Corporation Bank
- Dena Bank
- Indian Bank
- Indian Overseas Bank
- Punjab National Bank
- Syndicate Bank
- UCO Bank
- Oriental Bank of Commerce
- Union Bank of India
- United Bank of India
- Vijaya Bank
- Axis Bank Ltd.
- ICICI Bank Ltd.
- IDBI Bank Ltd.
Account Opening Form of Sukanya Samriddhi Yojna
Account Opening Form of Sukanya Samriddhi Yojna of State Bank of India is given below.
Reference: Official information Sukanya Samriddhi Yojna at
- Indiapost website www.indiapost.gov.in/SukanyaSamriddhi.aspx , Govt latest information(with Forms) at http://www.indiapost.gov.in/dop/Pdf%5CCirculars%5Csukanya_samriddhi_SB_Order_2.pdf
- RBI webpage here.
- PPF Account for Minor and Self
- Understanding Public Provident Fund, PPF
- What are you teaching your kids about money?
- Money Awareness for Beginners
Sukanya Samriddhi scheme is very much focused on girl’s education and marriage expenses and their future. But how popular this scheme becomes needs to be seen. Women focused financial schemes like Bharatiya Mahila Bank have not been very popular. Will you open a Sukanya Samriddhi account? Why or Why not? How can this scheme me made more attractive? How do you save for your child and especially daughter?