Sukanya Samriddhi Yojana (SSY) - Know the Tax Benefits

29 December, 2023

In 2015, the Indian Government observed a drastic decline in the country's child-sex ratio. To address the declining child sex ratio, the Indian Government initiated a national social media campaign, "Beti Bachao Beti Padhao", which translates to "Save girls, Educate girls". The campaign aims to eradicate the practice of female foeticide, female infanticide, and gender discrimination. It also aims to encourage girls' participation in education and other areas.

Sukanya Samridhi Yojana (SSY) is a government savings scheme created under the “Beti Bachao, Beti Padhao” campaign. As a parent, you can open an SSY Account for your girl child. It allows you to make affordable contributions, earn a competitive interest rate, and enjoy incredible tax benefits. Read on to know more about the SSY tax benefits.

Sukanya Samridhi Yojana tax benefits for parents

As a parent, you can avail of various tax benefits with the SSY Account. Sukanya Samridhi Yojana falls under the Exempt Exempt Exempt (EEE) category:

• Tax deduction under Section 80C
  
  Your investment amount does not draw any taxes. You can claim tax deductions of up to ₹1.5 lakh under Section 80C of the Income Tax Act, 1961. This way, you can reduce your overall taxable income. Note that deductions under section 80C will not be available if you opt for the new tax regime under section 115BAC.
  
  

• Tax exemption under Section 10
  
  Interest accrued an the SSY Account deposits is tax-exempt per Section 10 of the Indian Income Tax Act.
  
  

• Tax-free maturity amount
  
  When the girl child attains 18 years of age, you can withdraw the principal and interest amount, i.e., the maturity. This amount is tax-exempt.

Such incredible tax-efficiency allows you to build a significant corpus for your daughter’s education and other expenses. Like other investment tax deductions, you can claim the Sukanya Samridhi Yojana tax benefit while filling for the Income Tax Return (ITR) at the end of the financial year. Support your tax benefit claim with investment documents for a hassle-free tax-deduction acceptance.

Sukanya Samriddhi Yojana – What you should know

Besides tax benefits, you ought to know the following aspects of SSY:

• Account opening

  • You can open an SSY account for your girl child at the time of birth or until age ten.

  • Only one account can be opened for one girl child.

  • A family can open two accounts. Three accounts can be opened in case of a girl and later the birth of twins or triplets.

  • You can open the Sukanya Samriddhi Yojana Account at the nearest post office or authorised bank branch.

• Deposit amount

  • The minimum deposit amount is ₹250, while the maximum is ₹1.5 lakh for a financial year.

  • If you fail to make the minimum deposit for the year, your account will be classified as “Account under default”. You can reactivate the account by paying a fine of ₹ 50.

• Deposit tenure

  • As a natural or legal guardian, you must make deposits to the SSY account for 15 years.

  • On completion of 15 years, you do not have to make deposits. You will earn interest on the accumulated amount.

• Interest rate

  • You earn an attractive interest rate on your deposits.

  • The Indian government revises the interest rate every quarter.

  • The Indian government offered an interest rate of 7.6% for all four quarters of FY 2022-2023. The interest rate jumped to 8% for the first and second quarters of FY 2023-2024.

• Account operation

  • As a parent or legal guardian, you can operate the SSY account until the girl child turns 18 years old.

  • Once the girl child turns 18, the account must be mandatorily operated by her.

• Deposit maturity

  • The SSY account matures 21 years from the date of account opening or until the girl's marriage on attaining 18 years.

• Account withdrawals

  • As the girl child turns 18, you can request a 50% withdrawal to meet her higher education expenses. You must support the withdrawal request with educational documents.

• Premature account closure

You can close the SSY account prematurely under the following circumstances:

• You can close the account prematurely to provide medical support to the account holder in case of life-threatening disease.

• Account maintenance becomes a challenge in case of medical reasons or the death of the natural or legal guardian.

• The account can be prematurely closed if the girl child intends to marry. You should notify the post office or bank of this before or three months after marriage.

• You can opt for a premature account closure owing to the girl child's change of citizenship only after completion of Financial Years excluding the year when the SSA was opened.

Open a Savings Account for your girl child

As an existing HDFC Bank customer and a parent, you can open a Savings Account for your child with us. Your kids can enjoy educational benefits, healthcare benefits, personalised Debit Card and more. The SSY Account can be bundled with our Minor Super Kid Girl accounts for higher interest and tax benefits.

Invest in the Sukanya Samriddhi Yojana online through HDFC Bank. Click here to know more.

*The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Investments are subject to changes in tax laws. Please contact a professional consultant for an exact calculation of your liabilities.