Sukanya Samriddhi Account: Details & Guide (Updated 2020 with Tax Benefits)

Are you looking for the details of Sukanya Yojana 2020 or more specifically about Sukanya Samriddhi Account details? Then you have come to the right place.

Let’s begin with Sukanya Samriddhi Yojana interest rates 2020. 

The current interest rate for Sukanya Samriddhi Account is 8.4% (2020) and it provides tax benefits under Section 80C of the Income Tax Act of India.

So for the parents who want to know more about the Sukanya Yojana Details, then the very first thing to note is that the SSA Interest Rate 2019 is 8.4%

This government of India backed scheme which is targeted at the girl child (and their parents), is also known as Sukanya Samriddhi Yojana.

This Updated Guide (2020) for Sukanya Samriddhi Account has all the details that should be known to parents investing in SSA for their daughters in the coming years. I had written this guide few years back to highlight all the Sukanya Yojana Details for a friend who wanted to understand about the then newly-launched Sukanya Samriddhi scheme for his daughters. But I have now updated this to include latest rules and details of Sukanya Scheme.

The SSY scheme comes under Government of India’s Beti Bachao, Beti Padhao agenda to create awareness and help increase the welfare services for girls in India.

Here is a detailed and recently updated guide (2020), which I think will cover most of the latest features, benefits, rules and other Sukanya Samriddhi scheme details.

What is Sukanya Samriddhi Account (SSA)?

Sukanya Samriddhi Yojana or Account is a Small Savings Scheme which is designed especially for girl’s higher education and marriage needs. It was launched in 2015 (go through this RBI notification if you want) and is supposedly a risk-free savings product that offers tax deductions (benefits) that can be claimed by the parents of the girl.

The objective of the SSY scheme is to help the parents to gradually create a corpus of funds for their girl child’s higher education and marriage needs.

But apart from this obvious reason for scheme launch, I think the government also wanted to send out a social message that girl child is not a burden. And if planned well in advance (through Sukanya Samriddhi Scheme and other savings options), it is possible for parents to secure a girl’s future by regular investing.

People compare SSA with PPF due to similar structure, interests, etc. But it’s not entirely correct to compare, as PPF is not linked to any specific purpose. Whereas SSA has a very clearly defined end-purpose of girl’s education and marriage.

Who can open a Sukanya Samriddhi Account (SSA) and for whom?

Sukanya Samriddhi Account can be opened only on the girl child’s name. And only parents or legal guardian of the girl can open this account. It is possible to open SSY account in post offices or in any bank branches which are authorized by the Government to open Sukanya accounts under this scheme.

The new rules have also clarified that the Sukanya Account can be opened in the name of an adopted daughter as well.

But only Indian Resident Girl Child can be the Beneficiary under the SSA Rules. So NRI girl children cannot benefit from Sukanya Yojana 2020 or SSY scheme.

What is the Age limit for Sukanya Samriddhi Account?

The SSY account can be opened in the name of the girl child who is not more than 10 years of age. But for the first year of its operation (when the SSY scheme was launched in 2015), the government had given a grace period of one year.

So the age limit for Sukanya Samriddhi Yojana is 10 years. That is the maximum age limit for Sukanya Samriddhi Yojana account.

And what about the minimum age limit for Sukanya Samriddhi Yojana or the entry age for Sukanya Samriddhi Yojana? You can open an SSY account as soon as the girl child is born and up to 10 years of her age.

How many Sukanya accounts can be opened?

It is only allowed to open one account for one girl child. And a maximum of two Sukanya accounts can be opened for two girls.

But there is a well-thought-of exception to the 2 SSY account rules. If twin girls are born as the second birth or if triplet (3 daughters) are born in the first birth itself, then the SSY rules allow the opening of 3 Sukanya Samriddhi Accounts as well.

Minimum Deposit Amount for Sukanya Samriddhi Account?

The SSA Account can be opened with a minimum initial deposit of Rs 250 (Rupees Two Hundred and Fifty only).

After account opening, the parents are allowed to deposit any amount in multiples of Rs 250 subject to the condition that a minimum of Rs 250 shall deposit in each financial year per SSY account. (This rule was updated in 2018: Earlier and before rule change in 2018, a minimum of Rs 1000 had to be deposited in SSA in every financial year)

So the minimum amount to be deposited in Sukanya Samriddhi Yojana or Sukanya Samriddhi Yojana minimum amount is Rs 250 per financial year.

Maximum Deposit Amount for Sukanya Samriddhi Account?

The total money deposited in an SSA account in a financial year cannot exceed Rs 1.5 lac irrespective of whether it is deposited in one shot or spread across multiple deposits during the financial year.

So the limit set for maximum amount can be deposited in Sukanya Samriddhi Yojana is Rs 1.5 lac and it comes under the overall limit of Rs 1.5 lac limit of Section 80C.

But there is no cap on the number of deposit transactions you can make in a given year subject to overall limit of Rs 1.5 lac per account per year.

That was about the maximum and minimum deposit rules for Sukanya Samriddhi Account.

But what if you are not able to deposit any money in a particular year? Or you deposit an amount less than the minimum required amount? Don’t worry. For each defaulted year, a small penalty of Rs 50 has to be paid to regularize the account. But please remember that along with the penalty, you also need to pay the minimum amount for each defaulted year.

An irregular account can be regularized anytime till the completion of the first 15 years. But if the defaulted account is not regularized within 15 years, then the whole SSA deposit amount (including deposits made prior to the year of default) will only be eligible to get Post Office Savings Bank interest rate at the time of its maturity.

Sukanya Samriddhi Account Interest Rates?

This is what interests most people.

The current interest rate for Sukanya Samriddhi Account is 8.4%, calculated on a monthly basis but added to the account on a yearly basis. That is, Sukanya Yojana 2020 interest rate is 8.4%. To know more about interest rates in previous years, please check Sukanya Samriddhi Interest Rate History.

If you are curious to know is the interest rate for SSA fixed or variable, then let me tell you that the SSY interest rate is not fixed and is notified by the central government on a quarterly basis (just like it is done for PPF interest rates).

Currently, the PPF gives 7.9% (check PPF interest rate history) and hence on just the interest rate basis, Sukanya Samriddhi Yojana interest rate 2020, i.e. SSA @ 8.4% seems to be a better bet. But since these rates are to be revised every year, we cannot be sure whether SSA will always have a better rate than PPF or not. But as per my understanding and since SSA is also about a social cause, the chances of SSA rates going below PPF seem very low.

But does it mean that Sukanya Samriddhi scheme (or SSA) SSA is better than PPF? I will request you not to judge the two products solely on the basis of interest rates. There are few more important criteria, which should be taken into account before taking a final call.

So that was about the latest Sukanya Yojana interest details.

What is the Duration of the Sukanya Samriddhi Scheme?

This is very important to understand even you are planning to use Sukanya Yojana to save money for your girl child.

The scheme matures on completion of 21 years from the date of account opening or as the girl child gets married, whichever is earlier. Please note that the girl attaining the age of 21 years has no relevance to the maturity period of this scheme.

Though scheme duration is 21 years, you are only allowed to make deposit contributions for first 15 years. After the 15th year, you cannot make any further contributions, but the account continues to earn interest at the notified rates on balance amount for the remaining 6 years (up to 21st year after account opening).

A few important things to note here are:

• In case the account is not closed on maturity (even after 21 years of operation), the balance amount will not earn any interest as specified in the new SSY rules.
• In case the marriage of girl takes place before the maturity date (i.e. before completion of 21 years), neither any further operation of this account will be permitted nor any interest will be payable beyond the date of marriage.

Withdrawals from SSA Account for Education of Girl Child?

It is allowed to withdraw up to a maximum of 50% of the SSA account at the end of the financial year preceding the year of application for withdrawal, for the purpose of higher education of the girl child.

But such withdrawal for higher education will only be allowed if the girl has attained the age of 18 years or has passed 10th standard, whichever is earlier.

So for example, if the Sukanya Account balance at the end of the previous financial year is Rs 15 lac, then you can only withdrawal Rs 7.5 lac for your daughter’s higher education needs in the next FY.

The withdrawals for education can be made either in a lump sum or in instalments not exceeding one per year, for a maximum period of 5 years.

To ensure that the money is being used for education only, the parent or the guardian or account holder has to submit documentary proof of confirmed admission in an Educational institution (like fee-slip, etc.).

And it is worth highlighting that the amount of withdrawal is restricted to the ACTUAL fee demand. So if fee demand is less than the 50% balance amount (as per the rule), then only the actual fee amount is allowed to be withdrawn and not the full 50%

So that answers your questions about partial withdrawals from Sukanya Samriddhi Account.

And did you notice something about lock-in rule for Sukanya Samriddhi Account?

You know that the rule of 50% withdrawal (for education) is allowed only once the girl has attained the age of 18 years. And since the maximum age at which the SSY account can be opened is 10 years, there is practically a complete lock-in period of 8 years.

When is the SSA money Paid Out (Account Closure / Marriage)?

SSA matures after 21 years of account opening. But money can also be withdrawn for marriage before this 21-year period. But for that, parents have to give an affidavit confirming that the girl is an adult (18+ years).

And can the girl child continue the SSA account after her marriage? No. The operation of the account is not be permitted beyond the date of the girl’s marriage as per the current Sukanya Samriddhi Scheme rules.

What are the Tax Benefits for Sukanya Samriddhi Scheme?

The Budget 2015 put Sukanya Yojana Account (SSA) in the EEE (Exempt-Exempt-Exempt) category.

This means that contributions to SSA can be claimed as deductions under Section 80C. The yearly interest income (which is anyways added back to the amount in account) is also tax-free. And finally, the total amount at maturity or withdrawal (for education) is also tax-free.

So to your question about interest on Sukanya Samriddhi Yojana exempt under section? The answer is Section 80C

But keeping SSA under the purview of 80C has its drawbacks too. Section 80C in itself has a ceiling of Rs 1.5 lacs and is also used by other investment options like PPF (use this PPF Calculator, to know how much you can save using PPF), 5-year tax-free FDs, life insurance premiums (here are the tax benefits of insurance premium), for the repayment of home loans as there are tax benefits of home loan repayment too; NPS (to know more, read What is NPS and How NPS works?), etc.

So in all probability, if you do invest a full Rs 1.5 lacs in SSA (or Sukanya Samriddhi Account deposit scheme) and also have other investment in PPF, 5-year FDs, you won’t be able to get the full benefit. And that is because even though your investments which are eligible for deduction are more than Rs 1.5 lacs, the upper cap of Section 80C will restrict your deductions to just Rs 1.5 lacs.

So that was about Sukanya Samriddhi Yojana deduction under 80C and all the relevant details of Sukanya Samriddhi tax benefits.

How is the interest calculated on Sukanya Samriddhi account?

The interest calculation for SSA is similar to that of Public Provident Fund (PPF). The interest is calculated monthly but added back to the account at the end of the financial year.

But there is a slight difference.

The interest amount on SSA accounts balance is calculated for the calendar month on the lowest balance in an SSY Account between the 10th (tenth) day and the end of the month.

And remember that the interest in Sukanya Samriddhi account is exempt under which section: Section 80C of the IT Act.

Sukanya Yojana Calculation Chart (Updated 2019-2020)

Let me share some sample calculations for SSA Account here which will help you visualize how to calculate Sukanya Samriddhi Yojana maturity amount.

We will use a small example and then create a Sukanya Samriddhi Yojana Chart or depending on the year you are reading this, then Sukanya Samriddhi Yojana Chart 2020.

The below table illustrates sample calculations for SSA, where a monthly amount of Rs 5000 is deposited. The account is opened when the girl child reaches the age of 6 years.

Have a look at this Sukanya Samriddhi Yojana calculator chart below:

Note – The interest rate for SSY account is assumed to be fixed for full tenure at 8.4% (the current SSA interest rate)

As you can see in the calculation chart of Sukanya Samriddhi Yojana above, the contribution of Rs 5000 monthly is only made up to the 15th year of account opening. But the overall corpus grows to almost Rs 28.42 lacs at the maturity in 21st year.

Also when the girl child reaches 18 years of age, an amount equal to 50% of preceding year’s balance can be withdrawn. In the above example, this amount equals 50% of Rs 12.19 Lacs, i.e. about Rs 6.10 Lacs.

Here is another illustration which uses the calculation of Sukanya Samriddhi account to show the amount accumulated in Sukanya savings corpus at the end of 21 years (of account opening), and depending on the amount of annual investment – from Rs 10,000 to Rs 1.5 Lac:

So that was about Sukanya Account Charts for 2020. Let’s move on now.

Sukanya Account vs PPF Differences

Most people end up just comparing the current interest rate of PPF and Sukanya Samriddhi Yojana. But there are more things to compare in Sukanya Samriddhi Yojana vs PPF.

So let’s have a look at the difference between Sukanya Samriddhi Vs PPF (Public Provident Fund):

That was about the latest PPF vs Sukanya Yojana differences.

Now let’s move on.

Documentation Requirements (Sukanya Account)

When you have decided to open the SSY account, then you need to be aware of the documents required for Sukanya Samriddhi Account opening.

As per available details, as of now only three documents required for Sukanya Samriddhi Yojana account opening in girl child’s name. These are mandatorily required and are as follows:

• Birth Certificate of the girl child
• Identity proof of the parent/guardian
• Residence proof of the parent/guardian

You can open SSA in any post office or authorized bank branches.

Other Important Things To Note

• As of now, there is no nomination facility available for this scheme. In the event of girl’s death, the account will be closed and the balance will be paid to the parent/guardian of the account holder.
• The SSA is transferable anywhere in India if there is a need for the same. It can be transferred from a bank to a post office branch (or vice versa).
• You can also do an online transfer to Sukanya Samriddhi Account in the post office in India if you already have an SSA account for your daughter. To know more, read more about the Small Savings Scheme in Post Office among which one of the options is Sukanya Samriddhi Yojna.
• If there are two girls, you can invest Rs 1.5 lacs into each girl’s SSA. But you can only claim tax benefit for a maximum of Rs 1.5 lacs (upper cap of Section 80C)
• And if you want to know about Sukanya Samriddhi Account can be opened in which banks or the best bank to open Sukanya Samriddhi Account? Then remember that all banks and post offices offer the same Sukanya interest rate (currently at 8.4%). So the choice of bank or post office should not be driven by SSY interest rate but ease and convenience for you.
• If you wish to learn more about data like how many Sukanya accounts have been opened in India till now, then you can check this updated Sukanya Yojana numbers list (state-wise) maintained on Indian Post’s website.

Is Sukanya Samriddhi Account good for saving for Daughter’s Future?

This is not an easy question to answer.

But you need to understand that if you only consider interest rates for choosing SSA over PPF, then that is not the right thing to do. And its because there are important things like liquidity, lock-ins to compare too. What is the point of saving money if you cannot use it when you need it (lock-in)?

The very basis on which the Sukanya Samriddhi Scheme is based is to provide adequate funds for a girl’s education and marriage. And considering that account can only be opened up to the age of 10 years, it’s obvious that investment in this scheme is of long term nature (you can only withdraw when the girl turns 18).

And with this fact in mind that this scheme is to fund long-term goals, a return of SSA Interest Rate 2019 is 8.4% does seem to be on the lower side when compared with what well-diversified mutual funds have delivered in the past. You may like reading the solid and real-life story of wealth creation by SIP investing. Or if you wish to know how much money can be saved using regular investing, check this super-detailed page on SIP Calculations for Mutual Funds, which shows examples of various SIP investment amounts and how much wealth it can create.

So even though the earlier discussed Sukanya Yojana Calculation Chart and Sukanya Yojana Calculation Table which was used to highlight how much money can be accumulated using SSA account and how to calculate Sukanya Samriddhi Yojana interest at 8.4% and final maturity amount, remember that education inflation at times can be much higher than just 8-9%.

So maybe, just maybe, the savings you do in only an SSY account or Sukanya Samriddhi Account deposit scheme will not keep pace with educational inflation at all times.

Even in this study of Stable Investor’s PE-Return Analysis (2019-20), it was found that when the investment horizon is in excess of 7 or 10 years, it makes sense to invest more in equity asset (via equity mutual funds). This is necessary to beat the inflation, more so the high inflation of educational costs these days.

For someone who is adamant on not taking any risk at all, i.e. for a conservative risk-averse investor, the Sukanya Samriddhi Scheme makes a lot of sense. Not everyone is comfortable investing in equity-linked schemes and one should respect that fact. A lot of investors prefer guaranteed returns at the cost of earning lower returns. And as a matter of fact, tax-free return of 8.4%, and that too without risk* is not bad at all for a conservative, low risk-appetite person.

* But the risk of lower returns (8.4%), when compared to that offered by equity MFs (11-12%+) still remains.

But some concerns about SSA account still remain:

• You are only allowed to withdraw 50% when the girl child reaches the age of 18. But these days, most children complete their schooling by 17 and hence you don’t want most of the money locked at this stage. Education for a girl child is more empowering than marriage and hence money should be easily accessible when it is needed most for education.
• You are only allowed to invest for 15 years out of a total of 21 years. But what about the rest of time up to 21 years (assuming you opened SSA when the girl child was born)?? At the end of 15^thyear, you can’t even start investing in equity as not much time is left (only 6 years left). So you have already past the time when investing in equity would have worked wonders.

So what should one do?

The Sukanya Samriddhi Yojana interest rate 2020 is 8.4% and no doubt, it is definitely attractive for those parents who have daughters who are within the Sukanya Samriddhi Yojana minimum age requirements.

But I think that if you can bear with volatilities of stock market investing and can really stay on course for 15-20 years, then there is no sense in parking money in Sukanya Samriddhi Account. And that is even after considering the tax benefits.

You should simply start investing in line with your financial goals and do SIP in good equity funds (assuming your risk profile allows it). Period. No need to think about anything else. And for those who want to invest more than Rs 1.5 lac limit of maximum amount that can be deposited in Sukanya Samriddhi Yojana account, they will necessarily have to look for other suitable products for their children’s future planning.

But if you feel that you are not very comfortable with mutual funds, then you can choose to split the money between PPF and MF. Or between SSA, PPF and MF.

I suggest PPF even though its returns are lower because of higher liquidity when compared to SSA. I personally feel that we generally neglect liquidity when it comes to financial planning.

It’s better to have full liquidity on the entire savings corpus when your girl is about to enter college. Right? You don’t want to be limited by the 50% withdrawal rule when you clearly know that using the money for education is better than spending on marriage.

So that was about the latest updated Sukanya Yojana details and the full comprehensive details of Sukanya Samriddhi Account Deposit Scheme in India.

It is no doubt popular among parents of daughters and who wish to save for their daughter’s higher education and marriage. But in spite of the interest rate of 8.4% tax-free per year, you should be cautious about the scheme due to some restrictions as discussed about Sukanya Yojana 2020 earlier.

If you have several goals among which saving for daughter’s education and marriage is also one of the goals, then you should first plan your finances properly after undergoing a comprehensive investment planning exercise:

Stable Investor Financial Goal Planning Service

 

It will help create a proper financial plan which will guide you how to invest for all your financial goals and not just worry about using Sukanya Samriddhi Account for saving for your daughter’s future or just about knowing the latest Sukanya Samriddhi Scheme details in 2020.