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5 ways to make Sukanya Samriddhi Account work for you

Priyadarshini Maji
Post Office Small Savings Schemes Interest Rate Announces Post Office, Small Savings Scheme, PPF, FD, MIS, SSY, KVP, SCSS, RD, NSC

The Sukanya Samriddhi Account offers one of the highest interest rates when compared to other savings plans. Currently, the interest rate offered by SSY is 8.4 per cent. Sukanya Samriddhi scheme, offered by India Post, is one of the nine small saving investment schemes, run under the Ministry of Communications.

The other savings schemes include 15 year Public Provident Fund Account (PPF), Post Office Monthly Income Scheme Account (MIS), 5-Year Post Office Recurring Deposit Account (RD), Senior Citizen Savings Scheme (SCSS), National Savings Certificates (NSC), Post Office Savings Account, Kisan Vikas Patra (KVP), and Post Office Time Deposit Account (TD).

The SSY account can be opened at any time for a girl child before she turns 10 years old. A minimum of Rs 1,000 and a maximum of Rs 1.5 lakh can be deposited in a year, in this scheme. The Government of India revises the interest rate quarterly, which is compounded, and credited yearly. Investors also get tax benefits under this scheme.

Here are 5 ways under which you can benefit from the Sukanya Samriddhi scheme;

1. Sukanya Samriddhi Account currently offers an interest rate of 8.4 per cent per annum with effect from 01-07-2019, which is the second-highest interest rate among all small savings schemes offered by the Government of India. The Government every year declares the interest rate for the current Financial Year, which is compounded yearly, and credited yearly. The interest is accrued on a monthly basis on the lowest balance between the 5th and last day of the month.

2. The maturity of this scheme is 21 years from the date of opening of the account. Also, during the marriage of the girl child, the amount can be withdrawn. Note that, for marriage, the girl under whose name the account has been opened should be of 18 years at the time of marriage. Additionally, if funds are required for higher education, one premature withdrawal is allowed on attaining the age of 18 years by the girl child. Additionally, the withdrawal is restricted to 50 per cent of the balance that was at the end of the preceding financial year. One can make deposits in this account till completion of 14 years from the date of opening of the account, even though maturity is 21 years from the date of opening of the account.

3. The maturity proceeds are to be paid to the girl child, once the Sukanya Samriddhi Account matures. The account balance of the SSY account along with accrued interest is paid directly to the account holder. Additionally, the interest is paid even after maturity, unlike other financial schemes. This feature is why this scheme is so popular among investors. Under the Sukanya Samriddhi account even after maturity if the investor does not close the account, interest will be payable in the account till the final closure of the account.

4. This scheme is known as one of the most tax-efficient ones. Under Section 80 C of the Income Tax Act, from the contribution to this account, Income tax is exempted. The interest and also at the time of withdrawal, this scheme offers tax exemption.
Hence, this scheme is EEE (exempt, exempt, exempt), wherein exemption will be available on interest income, the contribution and at the time of withdrawal.

5. The SSY account comes with a lot of flexibility to operate the account. For instance, the SSY account can be opened with an initial deposit of just Rs 1000, after which one can continue with any amount in multiples of Rs 100. This comes with a max limit of 1.5 lakh during a financial year. Note that every Financial Year, a minimum of Rs 1000 should be deposited to keep account operative. Even in the case of two daughters, in a Financial Year the cumulative contribution cannot exceed 1.5 lakh. Also, once the girl child attains the age of 10 years, she can operate her account by herself.