Choosing the right investment scheme when designing your financial plan can make a big difference for your child's future. For your girl child in particular, the Centre's small savings schemes offer the Sukanya Samridhhi Yojana, which can help secure major life expenses, including education, healthcare, hobbies and other aspirations for your daughter.
Sukanya Samriddhi Scheme: Key features
- It provides tax benefits on the principal and interest earned. Further, it also gives the highest interest rate among small savings schemes at 8.2% for this quarter.
- Anyone can open an SSY account with any public bank or nearby post office for their girl child and begin investing with as little as ₹250 and a maximum of ₹1.5 lakh annually.
- Maturity period for this scheme is 21 years from the account opening date and your daughter has to be at least 10 years old for a valid account to be opened by parents/legal guardians.
- These accounts are required to have an annual minimum deposit, failing which a nominal penalty of ₹50 is charged. Dormant or lapsed accounts are allowed to be revived once penalties are paid.
- The scheme is eligible for tax deduction up to ₹1.5 lakh under Section 80C of the Income-Tax Act. The interest earned and maturity amount are also tax-free.
- A key feature of this scheme is that you can withdraw up to 50% of the balance once your daughter turns 18 - opportune time to fund her higher education.
When is early and partial withdrawal permitted?
- Partial withdrawal (up to 50%) is permitted after the girl turns 18 years old for educational purposes.
- Complete withdrawal is allowed upon maturity of the account at 21 years.
- Documentation is required for all types of withdrawals and penalties might apply.
Eligibility and requirements for withdrawal
To withdraw funds from Sukanya Samriddhi, the account holder must be at least 18 years old for partial withdrawals. Additionally, the account must be operational for a minimum period, typically 15 years from the date of opening. This ensures that the funds have had time to accumulate interest and maximise benefits.
It's also important to note that the scheme allows for only one account per girl child who is a resident of India.
You will also require documents to provide identity verification and proof of relationship such as Aadhaar card, PAN card, birth certificate of the girl child, and proof of admission for educational purposes. Any additional documents as specified on the official portal.
How to withdraw from Sukanya Samriddhi: Step-by-step guide
To initiate a withdrawal from the Sukanya Samriddhi Yojana, follow these steps:
- Visit your bank or the post office where the account is held.
- Fill out the withdrawal form and submit it along with the required documents.
- Ensure that you double-check the accuracy of the information provided on the form to prevent any issues.
- Verify the processing time and follow up if necessary. The typical processing time can range from a few days to a couple of weeks, depending on the institution.
- If you are applying for a partial withdrawal for educational purposes, make sure to attach the admission letter or fee receipt to facilitate faster processing.
- Make sure to fill the form accurately.
- Keep copies of all submitted documents and check for any fees associated with the withdrawal.
- The bank or post office will process the request, and the money will be transferred as per the mode selected
What are the special conditions for premature closure of account?
- In case of the death of the account holder, the account is closed, and the balance is paid to the parent or guardian along with applicable interest.
- In case of a life-threatening disease or medical emergency, the account is permitted to be closed after providing treatment proof or medical certificates.
- You can also shut the account if the child becomes a non-resident Indian (NRI). This requires submission of proof of change in residential status.
- Another exception is if the parent/guardian is unable to continue contributions due to severe financial hardships. You will need to check with the bank or post office for documents required for approval.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.