Sukanya Samriddhi Scheme Overview

The Central Govt. launched the ‘Sukanya Samriddhi Account’ programme in January 2015 with an objective to promote the welfare of girl child. It is a small deposit scheme for girl child which ensures their secure future and reduce their financial difficulties which they might have in future for their education or even for their marriage. It was also a plan which was toward the mission of ‘Beti Bachao, Beti Padao’ which was also launched on the same day.

The Govt. notifies a new scheme vide Notification No. GSR 912(E), dated 12-12-2019 which rescinds the previous scheme.

So, Let’s understand full details regarding it in very simple language:

Opening of Account

The account may be opened by the natural or legal guardian in the name of a girl child from the birth of the girl child till she attains the age of 10 years. Also, any girl child, who has attained the age of 10 years, one year prior to the commencement of these rules, shall also be eligible for opening of the account under these rules. The application for the opening of the account shall be submitted in Form-1 along with the birth certificate of the girl child in whose name the account has to be opened.

A Depositor (such guardian) may open only one account in the name of a girl child under these rules. Birth Certificate of such girl child AND Identity and residence proof of the depositor shall be submitted. Such guardian shall be allowed to open the account for two girl children only (except in cases when twin/three girl child is born together). It can be opened with Post-Offices and Notified banks as well,

Deposits

The account may be opened with an initial deposit of Rs. 1,000* and thereafter any amount in multiple of One hundred rupees may be deposited but the total amount deposited during the entire year shall not be less than Rs. 1,000 * and shall not exceeds Rs. 1,50,000 as well. The deposit in the account may be made through Cash, Cheque, or Demand Drafts.

[* Now this limit of Rs. 1,000 has been reduced to Rs. 250/- only]

Deposits can be made up to a maximum period of 15 years from the date of opening the account. After this period the account will only earn interest as per applicable rates.

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.

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 paisa or more shall be treated as one rupee and any amount less than that shall be ignored.

Operation of Account

The account shall be opened and operated by the natural or legal guardian of the girl child till the girl herself attains the age of 18 years. On attaining the age of 18 years, the girl child herself may operate the account. However, deposit in the account may be made by the guardian or any other person or authority.

Premature Closure of Account

In the event of Death of the account holder (i.e. the girl child), the account shall be closed immediately on the production of the Death Certificate and the balance remaining in the account shall be paid to the guardian with interest. Apart from this, Where the Central Govt. is satisfied that operation or continuation of the account is causing undue hardship to the account holder, the govt. may allow pre-mature closure of the account only in the case of extreme compassionate grounds such as medical support in life-threatening diseases, death etc.

The account opened under this scheme can be closed before its maturity by submitting the Form 2

Transfer of Account

The Account may be transferred anywhere in India if the girl child (i.e. the account holder) shifts to any other place other than the city or locality where account stands.

Withdrawal

For the higher education and marriage of such girl child, withdrawal up to 50% of the account balance at the end of preceding financial year shall be allowed. But, the withdrawal shall be allowed only when the account holder girl child attains the age of 18 years.

Closure on Maturity

The application for closure will be made in Form No 4

The account shall mature on when the Girl child completes her 21 years but if her marriage takes place before being 21 years then it shall be deemed as mature. But the girl child has to furnish a declaration that she is not less than 18 years on the date of Closing the account.

At the maturity of the account, the amount standing at the credit of the account along with the interest shall be paid to the account holder.

Income tax benefit on Sukanya Samriddhi Scheme

The deposits made to the account, and also the proceeds and maturity amount are fully exempt from tax under section 80C of Income Tax Act. It is similar to PPF in respect of Tax Deductions.

And that’s all about the Sukanya Samriddhi Account. In case of any queries or suggestions, do comments below. You can follow me @ Taxeffects.blogspot.com and also reach me at [email protected].

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Republished with amendments.

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