How investing in 'Sukanya Samriddhi Yojana' can help your daughter?

Sukanya Samriddhi Yojana (SSY) is a savings scheme offered by India Post, designed to provide a financial cushion for the girl child. The interest rates on this scheme are reviewed quarterly, with the current rate standing at 8 percent for investments made at designated post office branches. This rate is calculated on yearly basis  and is yearly compounded too.

The Sukanya Samriddhi Yojana account can be opened by a guardian in the name of a girl child below the age of 10 years. Only one account can be created for a girl child in India, either in a Post Office or a bank. However, in the case of twins or triplets, more than two accounts can be opened.

The account can be initiated with a minimum deposit of Rs 250. Subsequently, deposits can range from a minimum of Rs 250 to a maximum of Rs 1.50 lakh in a financial year, which can be made in a lump sum or multiple instalments.

Deposits can be made until the account reaches a maximum age of 15 years. A defaulted account can be revived by paying a minimum of Rs 250 plus a Rs 50 default fee for each defaulted year. Furthermore, deposits qualify for deductions under Section 80C of the Income Tax Act.

Interest rates are set by the Ministry of Finance on a quarterly basis. The interest is calculated on the lowest balance in the account between the fifth day and the end of the month, with interest being credited at the end of each financial year. Importantly, the interest earned is tax-free under the Income Tax Act.

Until the girl child attains the age of majority (18 years), the account is managed by the guardian.

Withdrawals can be made after the girl child reaches the age of 18 or has completed the tenth standard. Up to 50% of the balance from the preceding financial year can be withdrawn in a lump sum or in instalments, not exceeding once a year, for a maximum of five years, subject to certain specified ceilings and fee requirements.

The account can be prematurely closed under specific conditions, including the unfortunate event of the account holder's demise or due to extreme compassionate grounds. In such cases, PO Savings Account interest rates would be applicable, and proper documentation and applications are necessary.

The account matures 21 years from the date of opening or at the time of the girl child's marriage after reaching the age of 18 years, with a window of 1 month before or 3 months after the wedding.

Individuals can open a Sukanya Samriddhi Yojana (SSY) account with a participating bank or a post office branch with these procedures:

Step 1: Visit the bank or post office branch and fill up the application form (Form-1) with relevant details and provide supporting documents.

Step 2: Pay the first deposit in the form of cash, cheque, or demand draft.

Step 3: The bank or post office will process the application and payment. Upon processing, the SSY account will be opened. A passbook will be issued for this account marking the initiation of the account.