Important Things to Note Before Investing in Sukanya Samriddhi Yojana

According to a recent survey, the percentage of women pursuing higher education rose from 45% in 2011-12 to 48% in 2017-18. Nevertheless, the cost of availing higher studies has gone up too; and, this is one of the reasons why more women are not going for higher studies.

The government has introduced many schemes to make higher education affordable for women. One such initiative to further the cause of education of girl child is SSY or Sukanya Samriddhi Yojana, launched in 2015. This scheme allows the parents of a girl child to build a fund to sponsor her educational career and consequently have an independent career of her own. Apart from education, this fund can also be used to finance the marriage expense of a girl child.

However, some important things should be noted before opening an account under Pradhan Mantri Sukanya Yojana. It includes eligibility criteria, necessary documents and tax benefits that can be availed under this loan.

Who is eligible to open an SSY account?

The parents or legal guardian of a girl child can open an account in a post office or financial institution any time between her birth and 10 years of age. Parents and even the girl can operate the account after she becomes 10 years old. The girl should compulsorily handle the account after her 18^th birthday.

What documents are required to open an SSY account?

The documents mentioned below are required to open an account under Pradhan Mantri Sukanya Yojana –

• Birth certificate of the child.
• PAN card, Voter card, Aadhaar Card, Driving License, and Passport as proof of identity of guardians.
• Apart from the PAN card, the above mentioned documents can also be used as residential proof.
• In the case of multiple girl children in a single birth, a medical certificate has to be furnished.
• Any other documents asked by the post office or financial institutions.

Other vital points that one should know about Pradhan Mantri Sukanya Yojana

1. Minimum of Rs.250 and maximum of Rs.1.5 lakh deposit can be made.
2. Deposits have to be made every financial year for a minimum of 15 years from the account opening date.
3. Cash, cheque, demand draft or any online payment methods can be used to make the deposit.
4. The deposit in this account can be transferred between any two post office or financial institution in India. In that case, a proof of a change in residence of guardian or the child has to be furnished.

Tax benefits of Sukanya Samriddhi Yojana

Both the invested amount and interest earned are exempt from income tax under Section 80C.

Limitations of Sukanya Samriddhi Yojana

• Sukanya Samriddhi scheme can only be opened for two girl child per family. Furthermore, the investment tenor under Pradhan Mantri Sukanya Yojana is also fixed.
• Under this scheme, one cannot close the account before maturity period except in certain extreme cases such as the death of the account holder, in case of marriage after 18 years of age or if she renounces Indian citizenship/residency.

The account can also be closed prematurely if sufficient proof is provided that the account holder or her guardians are unable to continue the account.

• Premature withdrawal is also allowed if it is used to fund expenses related to higher education. Even then, account holders cannot withdraw more than 50% of the total deposit amount.

Consequently, one can opt for a fixed deposit account with a financial institution or NBFC to avoid such restrictions. Bajaj Finance is an NBFC that offers FDs with attractive interest rates.

While opening a fixed deposit account, there is no restriction in case of gender or number of children per family. Interest earned on FD is subject to TDS if the investor’s total interest income in a financial year is above Rs.40,000. Investors must know the benefits of form 15G or 15H for fixed deposits to save on taxes.

Advantages of opening a fixed deposit account

• The tenor is flexible in a fixed deposit. Therefore, one can also avail higher returns as the interest rates vary based on the tenor period.
• One can also opt for different interest payment frequencies as per their convenience. An investor can choose to receive it on a monthly, quarterly or at the end of the maturity period.
• A fixed deposit account can also be prematurely closed; the deposit can be withdrawn before the maturity period.
• Unlike SSY, emergency loans can be availed against the fixed deposit amount. You should, therefore, know the best way to take a loan against your fixed deposit.

One can also check the interest that they will receive with the help of an FD interest rates calculator. It will help investors to plan their investment accordingly and grow their wealth.