9.1% Sukanya Samriddhi Account – Saving Scheme for Girl Child
Last week, Prime Minister, Mr. Narendra Modi launched Sukanya Samriddhi Account, saving scheme for child, which can be used for girl child education or marriage expenses. This is a small saving scheme which offers 9.1% interest rates for Financial year 2014-15. Amount deposited under Sukanya Samriddhi Account is exempted u/s 80C. What are the features of Sukanya Samriddhi Account ? What are the benefits of this saving scheme intended for girl child? Are there any drawbacks in this Sukanya Samriddhi Scheme? What are the sukanya samriddhi account rules 2014? How to look Sukanya Samriddhi Account Details? How Sukanya Samriddhi Account Interest Rates are compared with PPF account which has sumilar features?
Features of Sukanya Samriddhi Account
- Guardian or parent can open Sukanya Samriddhi Account in the name of the minor girl child till 10 years of age.
- Minimum deposit is Rs 1,000 and in multiples of Rs 100 thereon.
- Maximum deposit can be made is Rs 1.5 Lakhs in a financial year.
- Interest rates are 9.1% for financial year 2014-15. Interest would be decided by central government year on year. Interest on this account is tax free.
- You can open Sukanya Samriddhi Scheme account at any Post Office or at any authorized branches of commercial banks in India.
- Account would be active till girl attains 21 years of age or during marriage after 18 years of age.
- To meet higher education expenses, partial withdrawal is allowed up to 50% of the balance accumulated till the end of the last financial year. This is allowed after girl attained 18 years of age. This provision is kept so that early marriage is prevented before 18 years of age.
- The amount can be deposited through Cash or Cheque or Demand Draft.
- Interest is compounded on an annual basis and would be first credited when a girl attains 14 years of age. The logic behind this is not known.
- Passbook is given where deposits and interest credit transactions would be updated.
- Sukanya Samriddhi Account can be transferred anywhere in India in case girl moves from one city to another.
You may also like: Which are the best child investment Plans in India?
What are the benefits of Sukanya Samriddhi Account Girl Saving Scheme?
- High interest rate of 9.1% for financial year 2014-15. None of the small saving schemes, offer such high interest rates.
- Tax deduction u/s 80C upto Rs 1.5 Lakhs in a financial year.
- Good for Parents / Guardian who want to save for their child for education or marriage for a long term of 18-21 years and looking for safety of their investment.
- Interest on Sukanya Samriddhi Account is tax free. This was announced on 28-Feb-2015 during budget announcement.
Drawbacks of Sukanya Samriddhi Girl Saving Scheme
Some of the major drawbacks of Sukanya Samriddhi Account are indicated below.
- Lock-in period of this scheme is 21 years or at marriage after 18 years of age. Partial withdrawals for education is allowed at 50% of the accumulated corpus after 18 years of age. Hence it is illiquid investment scheme.
- Returns of 9.1% or future interest may not meet future expenses as the cost of education / marriage expenses has been boosting year on year at higher rate.
- Parent / Guardian can open only 2 Sukanya Samriddhi Accounts. If they have more than 2 girl children, they cannot open more accounts.
- Online money transfer to Sukanya Samriddhi Account is not possible. You have to deposit only through cash / cheque / demand draft.
- There is no guarantee of getting higher interest rates in future. They are fixed every year by Central Government as it does for PPF account.
- In case minimum amount is not deposited in any financial year, you can re-activate by paying a penalty of Rs 50 per financial year and by depositing any minimum deposits of backlog.
How to open Sukanya Samriddhi Account?
Parent / Guardian can take their address proofs along with a girl child's birth certificate and approach any post office or authorized branches of commercial banks and open this girl saving scheme.
What are the tax benefits available for this Sukanya Samriddhi Account?
- Amount deposited upto Rs 1.5 Lakhs in a financial year is available as tax deduction u/s 80C.
- Maturity amount is tax free as announced on 28th February, 2015 during budgets.
Sukanya Samriddhi Account Vs PPF Account – Comparison
There are some similarities in both these accounts, hence I thought, I would provide a comparison.
Lock-in period: Sukanya Samriddhi Account is locked for 21 years or at girls marriage after 18 years. PPF account on the other hand has lock-in period of 15 years. PPF scores high in this case.
Interest Rates: Sukanya Samriddhi scheme currently offers 9.1% for this financial year. PPF on the other hand, offers around 8.7%. Both are tax free at maturity. Hence Sukanya Samriddhi scheme scores high in this case.
Partial withdrawals: In Sukanya Samriddhi scheme, partial withdrawal’s are allowed after 18 years of age to the tune of 50% for girl education. PPF on the other hand, partial withdrawal are allowed after 6 years with certain conditions.
Should you consider Sukanya Samriddhi Account as an investment option for your girl child?
Interest rates are good. However, it may fluctuate every year like PPF rates. Child education / girl marriage expenses are rising every year. Hence 9% returns may not be sufficient in the long run of 18-20 years. If one can take some risk, they can consider investing in ELSS mutual funds (for tax benefit purpose) or equity mutual funds as they provide good returns in long run of 15-20 years. Some amount can be parked in debt schemes like Sukanya Samriddhi Account to gain high interest rates.
Readers, what is your view on Sukanya Samriddhi Girl Child Saving Scheme? Do you feel this is a good scheme promoted by Central Government.
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Sukanya Samriddhi Account – Saving Scheme for Girl Child