What Are Sukanya Samriddhi Yojana Tax Benefits?

The Government of India, over the past decades, has been the torch bearer of equal rights for the girl child. The Sukanya Samriddhi Yojana, a Centre-backed scheme, was introduced in 2015 by Prime Minister Narendra Modi to support this cause. It is a corpus-building scheme that enables you to secure your child’s financial future.

You can contribute a minimum of ₹250 per year for 15 years. This fund will mature when your child turns 21, giving them financial flexibility at a juncture of life when they will need it most.

Besides building a corpus, you may enjoy a lucrative Sukanya Samriddhi Yojana tax benefit. This includes tax exemptions for the money you invest in the scheme and the final corpus. Through this article, let us explore Sukanya Samriddhi Yojana tax benefits and the desired eligibility criteria.

Sukanya Samriddhi Yojana Tax Benefits

Sukanya Samridhi Yojana comes with plenty of tax-saving options to better encourage you to save for your girl child. Tax benefits on Sukanya Samriddhi Yojana can be broadly divided into the following:

Sukanya Samriddhi Yojana Benefits on the Amount You Invest

The scheme falls within the purview of section 80C of the income tax act of India 1961. Hence, your contributions towards it are eligible for tax exemption for up to ₹1.5 lakh. Here, the maximum contribution allowed towards the scheme is ₹1.5 lakhs per annum (the minimum being ₹250 per annum). So if you don’t have other 80C schemes or investments to claim, your contribution to the SSY scheme could be completely tax-free.

Sukanya Samriddhi Yojana Income Tax Benefit on the Returns

The SSY scheme promises fixed returns. However, the government announces interest rate changes regularly. As of January 2024, the interest rate is currently fixed at 8.2%. This rate of interest is higher than what most FDs can offer you. Combined with the compounding, this could appreciate your investments considerably. The advantage of Sukanya Samriddhi Yojana is that the entire profit, including the compounded returns, is exempted from tax.

Also Read: How to check PF Balance: The Top 4 ways

SSY Tax Benefit for the Corpus

Consistent investments can guarantee a significant corpus for your child. So here comes the best part – the entire corpus at withdrawal is also tax exempted. That means your girl child will be able to use the money without needing to pay any tax.

Tax Deduction Eligibility Criteria

Before discussing the eligibility criteria for Sukanya tax benefits, you must understand this savings account in detail. Here is a walk-through:

• You can open an SSY account at your girl’s birth and before she turns 10. Consequently, this also means you can avail of the scheme for your girl child only.
• The account remains operative until your child turns 21 or she marries after 18.
• There is a limit of two accounts per family, i.e. you can open one account for each of your daughters. In case the first child born is twins then a separate account can be opened for the third girl child also.
• The adult who deposits money must be the child’s parent or legal guardian.
• The deposit period is 15 years, whereas the maturity period is 21. If you open an account at the time of your child’s birth, you must make deposits for 15 years and continue the remaining six years deposit-free.

Now that you know the nuances of a Sukanya Samriddhi account, let us throw some light on the criteria for tax exemption:

• Only one adult among the parents or legal guardians can claim tax benefits for the money invested in the fund under section 80C of the Income Tax Act. The tax benefit for investment amount can’t be split between two adults, even if there are multiple contributors. However, the tax exemption at maturity is unconditional.

Also Read: 9 Sukanya Samriddhi Yojana Benefits Support India’s Girl Children

Final Thoughts

The Sukanya Samriddhi Yojana is beneficial both as an investment option and a tax-saving method. The best part is that your daughter can enjoy the benefits at maturity without paying any tax. In addition, the corpus could be substantial if you have invested regularly. This allows your child to make life decisions and efficiently support her desires.

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