Sukanya Samriddhi Account – specially for girl child – Eligible for deduction U/s 80C of IT Act

[P Nair]

Sukanya Samriddhi Account – specially for girl child – Eligible for deduction U/s 80C of IT Act

This Investment Scheme is for a minor girl child below the age of  10 years.  Only the natural or legal guardians are allowed to open this account in the name of girl child, and you can open only one account in her name. The government, however, has relaxed the age limit if your child turned 10 within a year before the announcement. This means that if the child turned 10 anytime between December 2013 and December 2014, you can open such an account in her name.  You can open accounts only for two girl children. If you have twin girls in a second birth, and you already have a girl child, then you can open a third account. Same is applicable if you have triplets and all three are girls.

The initial deposit is Rs.1,000 and thereafter any amount in multiples of Rs.100. The total deposit you can make in a financial year should not exceed Rs.1.5 lakh. You can make deposits for 14 years from the date of opening of the account. The minimum deposit amount is Rs.1,000 in one financial year; failure to deposit this will cost you Rs.50 in penalty. Deposits can be made by the guardian or any other person or authority. Interest will be compounded yearly.

The government has declared 9.1% interest rate for this financial year. It will be reset every year.

In the unfortunate event of the child dying, the account will be closed immediately and the balance will be paid to the guardian of the account holder.  The account is transferable anywhere in India. Partial withdrawal—50% of the total amount—is allowed when the account holder turns 18, for financial requirements such as education or marriage. The account will mature after completion of 21 years from inception. Withdrawal before the child turns 18 is not allowed.

Procedure to open the investment Account

You can open this  account in a post office or an authorized bank branch. You will have to submit the child’s birth certificate along with other documents such as your identity and residence proof. You can deposit money in cash, by cheque or through demand draft. Till the girl child turns 10, you will be able to open and operate the account. After that, she can operate it herself.

On opening an account, a passbook will be given, which has to be presented to the post office or bank at the time of depositing money in the account or receiving payment of interest. At the time of finally closing the account on maturity, the passbook will be needed.

Tax Deduction U/S 80C

The amount deposited in this account is eligible for  deduction under section 80C  and, hence, the Rs.1.5 lakh that can be deposited in the account in a year will be tax exempt along with other deposit schemes come under the preview of this section.  This investment scheme works best for those who are looking for safe investments, and also for those who don’t have access to other investment products.

 

 

Sukanya Samriddhi Account vs Public Provident Fund (PPF)

Points of Difference	Sukanya Samriddhi Account (SSA)	Public Provident Fund (PPF)
Eligible Persons	Only for Girl Child.	For every Indian Citizen.
Age Limit	From the birth till she attains age of 10 years.	No age limit.
Beneficiary	By the girl child who has attained the age of 10 years or by the natural or legal guardian.	By the Individual but by the natural or legal guardian for the minor child.
Where to open	Post office and nationalized banks but not private banks.	Post office and nationalized banks, including private banks.
Maximum Number of Accounts	One account for each girl child, maximum up to 2 or 3 accounts if twin girls are born in the second birth or triplets are born in the first birth.	Each Individual can hold only one account in his name.
Minimum Contribution	Rs.1,000	Rs.500
Maximum Contribution	Rs.1.5 lakhs in all accounts.	Rs.1.5 lakhs in all accounts.
Interest Rate	9.1% per annum for fiscal year 2014-15.	8.70% per annum for fiscal year 2014-15.
Tax Benefit on the Contribution	Contributed Amount will be deductible u/s 80C.	Contributed Amount will be deductible u/s 80C.
Tax Benefit on the interest earned	At present no tax benefit is announced for the interest earned. A mere sum of Rs.1,500 will be deductible u/s 10(32)  (awaiting for clarifications)	Interest Earned is tax free under PPF.
Time Period of contribution	Minimum tenure of contribution is 14 years from the date of opening of account.	Minimum 15 years and then in blocks of 5 years.
Maturity Period	21 years from the date of opening of account.	15 years from the fiscal year of opening of account.
Penalty	Rs.50 per year if minimum contribution is not made.	Rs.50 per year if minimum contribution is not made.
Mode of Deposit	Cash or Demand Draft or Cheque	Cash or Demand Draft or Cheque
Premature Withdrawal	Allowed up to 50% for the girl’s higher education and marriage after she attains 18 years of age	No premature withdrawal is allowed except in case of death of the account holder.
Loan Facility	No loan can be taken on the SSA balance.	Loan can be taken from the third year of opening of account to the sixth year.
Tax treatment on Maturity	No tax will be levied on the maturity amount.	No tax will be levied on the maturity amount.

 

 

 

 

Sukanya Samriddhi Account deposit eligible for Section 80C Deduction

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 09/2015

INCOME-TAX

Dated- 21^st  January , 2015

In exercise of the powers conferred by clause (viii) of sub-section (2) of section 80C of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby specifies the ‘ Sukanya Samridhi Account”  for the purposes of the said clause.

1.     This notification shall come into force with effect from the date of its publication in the Official Gazette.

[F. NO. 178/3/2015-ITA-1]

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