The Government of India has launched various saving schemes which allow you to save money and create a financial corpus for your goals. Most of these schemes are fixed income schemes wherein you get a fixed rate of interest on the amount that you invest. The Sukanya Samriddhi Yojana (SSY) is one such scheme which offers savings with a guaranteed rate of return. Let’s understand the scheme and know more about the Sukanya Samridhi Yojana interest rates.
What is the Sukanya Samriddhi Yojana?
Sukanya Samriddhi Yojana is a fixed income investment scheme which is meant for the girl child. The scheme was introduced by the Government under its ‘Beti Bachao Beti Padhao’ initiative. The scheme is an annual investment scheme wherein annual investments would have to be made till the scheme matures.
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Features of SSY
Here are some of the important features of the SSY scheme –
- The scheme can be opened by parents of a girl child after her birth and before she turns 10 years of age
- A minimum deposit of Rs.250 is required to open the SSY account. Every year a minimum of Rs.250 should be deposited to keep the account active
- The maximum deposit allowed under the scheme is Rs.1.5 lakhs
- The account matures till the age of the girl child attains 21 years of age or till she gets married after 18 years of age
- Partial withdrawals are allowed from the SSY account provided that the girl attains 18 years of age. Up to 50% of the balance in the SSY account can be withdrawn
- Only one SSY account can be opened in the name of the girl child
- Deposits can be done for up to 15 years after the account is opened and the tenure of the scheme is 21 years
Sukanya Samriddhi Yojana Interest Rate
Sukanya Samriddhi Yojana interest rate is fixed by the Government based on the yields provided by Government securities. The interest rate is also reviewed every quarter. The Sukanya Samriddhi Account interest rate, once fixed, does not change. For the quarter starting 1st October 2020, Sukanya Samriddhi Yojana interest rates 2020 is 7.6% per annum. The Sukanya Samriddhi Yojana interest rates in 2020 for other quarters is as follows –
|From 1st January 2020 to 31st March 2020||8.4% per annum|
|From 1st April 2020 to 30th June 2020||7.6% per annum|
|From 1st July 2020 to 30th September 2020||7.6% per annum|
|From 1st October 2020 to 31st December 2020||7.6% per annum|
The Sukanya Samriddhi interest rates for the different quarters of 2019 are as follows –
|From 1st January 2019 to 31st March 2019||8.5% per annum|
|From 1st April 2019 to 30th June 2019||8.5% per annum|
|From 1st July 2019 to 30th September 2019||8.4% per annum|
|From 1st October 2019 to 31st December 2019||8.4% per annum|
Interest is calculated on the investment annually on a compounded basis. This allows you to earn interest on the interest already earned.
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For example, if you deposit Rs.10, 000 in a year, interest would be calculated on Rs.10, 000 @7.6% and would amount to Rs.760. In the second year, if you deposit another Rs.10, 000 into the scheme, then interest would be calculated on (10,000 + 10,000 + 760) i.e. on Rs.20, 760. So, in the next year, if the interest rate remains the same, the interest payable would be Rs.1577.76.
Situations when Sukanya Samriddhi interest rate is not payable
Though the SSY Account pays guaranteed interests at the rates set by the Government, there are some instances wherein the interest would not accrue into the account. These instances are as follows –
- You have to make a minimum deposit of Rs.250 every year till the account runs. If the minimum deposit is not made, the account would become inactive. To activate the account a penalty of Rs.50 would have to be paid along with the amount which is to be deposited. If the penalty is not paid, interest on the deposit would not apply. In that case, the entire amount of deposit would earn a reduced rate of interest. In that case, SSY interest rate would not apply. The interest rate of savings account would apply which is lower than then Sukanya Samridhi interest rate. If extra interest has been paid before there was a default, such interest payment would be deducted from the account balance
- Premature closure of the SSY account can be allowed after 5 years from the date of opening of the account. However, this withdrawal would be allowed only for compassionate reasons if there is a medical emergency or a life-threatening condition. If the account is closed prematurely for any other reason, the SSY interest rate would not apply. In that case, the interest rate of the savings account would apply to the deposits.
Tax implication on Sukanya Samriddhi account interest rate
The Sukanya Samriddhi scheme is a tax saving investment scheme. The investment that you make into the SSY account is allowed as a deduction from your taxable income. Investment up to Rs.1.5 lakh can be claimed as a deduction under Section 80C of the Income Tax Act, 1961. Furthermore, the scheme is an EEE scheme. This means that not only the investments but the interest earned and the amount received is also tax-free in your hands. Thus, the SSY interest income is also tax-free in your hands. This makes the scheme tax efficient so that you can save your tax liability while investing and also create a tax-free corpus for your daughter.
The Sukanya Samriddhi Yojana interest rate has reduced in the recent quarters as you can see from the above mentioned tables. However, despite reduction in the interest rate, the SSY scheme offers the highest interest rate among other small saving schemes available in the market. It, therefore, helps you create a good corpus for your daughter’s future without worrying about tax liability.
So, build an earmarked corpus for your daughter by investing in the Sukanya Samriddhi Yojana Account and also earn good interest rates on your deposits.