Sukanya Samriddi Account – Should you Invest ?

What is Sukanya Samriddhi Account

Sukanya Samriddhi Account (SSA) is an investment scheme started by Government of India which can be opened for a girl’s child. The scheme is specially designed for girl’s higher education or marriage needs and can be opened by girl’s parents or legal guardian (in case parents are missing). One can deposit a maximum of Rs 1,50,000 per financial year (Apr – Mar) and the deposit is exempted from income tax under sec 80C. In other words, the amount you deposit can be deducted from your income and if you are in 30% tax bracket, it can save you Rs. 45,000, while some in 20% and 10% bracket can save upto Rs. 30,000 or 15,000 respectively. The interest paid to this account is set for 9.1% for 2014-15 and 9.2% for 2015-16 and this rate will vary every year based on calculation by government. This is very similar to the rates paid in PPF.

So now you know what is SSA, what else is important to know:

Who and where can the Account be opened

This account can only be opened for a girl child who is less than 10 years of age as Jan 2015.  The account can only be opened by natural or legal guardian and tax deduction can also be claimed by one of the parents. As this scheme was announced in Jan 2015 if the child turned 10 any time between December 2013 and December 2014 ie. born between Dec 2003 to 2004, you can still open  account in her name. If you have more than 2 girls, you can still open the account for only 2 girls.
As per the notification, this account can be opened either in a Post Office or any public sector bank. You will get a passbook under this scheme which will have details of the account holder (daughter name) along with other information like date of opening etc

Now that you know if you can open the account, what are the documents needed:

Documents and Form for opening Sukanya Samriddhi account. 

• Birth certificate of girl child
• Address proof
• Identity proof

One can open only maximum of 1 account per girl child and in total only 2 accounts can be opened by parents for 2 girls (one for each), but in case the second birth has resulted in twins, then 3 accounts are allowed. You can’t open multiple accounts for the same child like you do in saving bank account. This is very similar to the PPF account.

You can download the application form from here
Sukanya Samriddi Scheme form
You can also get the application form free of cost from your post office.

Now that you know the documents needed to open account, how can you deposit the money :

Amount of Deposit and Frequency in SSA

The minimum amount one has to deposit per year is Rs 1,000 and maximum amount is Rs 1,50,000 which is also the exemption limit of 80c.There is no limit of the number of transactions in a year. When you open the account for the first time, you have to deposit a minimum of Rs 1,000 and above that any multiple of Rs 100. In case you are not able to deposit any amount for 1 year, then there is a penalty of Rs 50.
The money can be deposited by cash, cheque or Demand draft as your post office or public sector banks.
So can the deposit be made online: No, right now the technology is not there. So if you are someone who manages his finances online, you have to go to your post office for deposit.

Okay I know how to open the account and deposit. What are the returns expected and would it be better than PPF:

Returns from Sukanya Samriddi Account

For the two years we know the return for SSA is 9.1% for 2014-15 and 9.2% for 2015-16 while the same for the PPF is 8.75%. So as you can see the returns are sustainably more for SSA but you do need a girl for opening the account and if you don’t have one, you cannot use this scheme.

So how much money will be get at the maturity:

This is the question which will come to most of you. Obviously, it will depend on the amount of the money you deposit and the time period for which you are keeping the account but I have done a calculation for you which show if you deposit Rs 1000 per month for 14 years, and take the money at maturity, what your corpus will look like.
So Rs 12,000 invested every year for 14 year (Rs 168,000) would be equal to Rs .607,128 after 21 years by the magic of compounding.

You can find the calculator to see the amount you will have depending on the deposit you make here.

Now you know how to open account, your returns the next question is can you take money out of the account if you need:

Premature Withdrawal or closing of Account

Sukanya Samriddhi yojana  will get matured once you girl child reached the age of 21 yrs from the or before the marriage of the girl, whichever is earlier. The good part is that if parents want to close the account before 21 year for marriage purpose, they have to give an affidavit that the girl has reached at least 18 yr of age. One can also partially withdraw 50% of the balance amount after the girl reaches 18 years of age, for the education purpose and rest has to be left in the account so that it can be used for the marriage purpose. The withdrawal process is expected to be easy to do .

In case of the death of the girl, there is a possibility of closing of the account.

I have tried to answer the most basic questions but if you have some more questions about the scheme, please feel free to leave a comment or write to me and I will try to answer it for you.