Till when I can open account under this scheme. Time/ Date Limit?

Account under this scheme can be opened anytime during the year, provided the age limit of the girl child is within specified range.
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Age limit under the Scheme:

Girl child who is 10 years of age or younger, can only open account under this scheme. This means that for current year, girl child born on or after 1st January 2007 will only qualify for opening account under this scheme.

In the 1st year of this scheme, GOI has provided age exemption under the scheme. Only for that year, girl child born between 2nd December 2003 – 1st December 2004 could also open account under this scheme.

Account Limit?

Maximum 1 account per girl child. Maximum 2 account per guardian. In case of triplet daughters from 1st birth or twin daughters from 2nd birth parent can open maximum of 3 accounts. 1 account for each girl child.

I have PPF, should I invest in this scheme.

Having a PPF is a good investment strategy, so kudos to you for having a PPF account. Whilst in totality the SSY resembles PPF closely, it is still a good scheme to invest in. Let’s look at 2 scenarios where in spite of having a PPF a SSY will prove to be an investment opportunity for you.

  • If you exhaust limit in PPF, still this is good option to save more for girl child
  • You can use PPF fund for self saving, and this scheme fund for girl child.
  • You can invest in both PPF and SSY and save up to Rs 3,00,000 p.a for your girl child
  • SSY offers higher rate of interest than PPF

Taxation on deposit, interest and maturity sum?

This scheme has been granted tax free status. Lets understand what this really means.

Deposit under SSY qualifies for deduction u/s 80C. However many other investments and deposits too qualify u/s 80C for deduction. Total limit of deduction u/s 80C is Rs 1, 50, 000/- per person per annum.

Hence your deposit in SSY will qualify for deduction u/s 80C, however it will be subject to the total limit of Rs 1,50,000/-.

This means if you invest in the various scheme and deposit u/s Sec 80C, including SSY up to Rs 2,00,000 p.a; then you will receive tax exemption up to Rs 1,50,000/- only. On rest 50,000/- tax will be applicable.

In case currently you are investing Rs 1,00,000/- p.a under the various schemes u/s 80C then you can invest additional Rs 50,000/- under SSY, and claim exemption of entire Rs 1,50,000/- p.a

Interest income and maturity sum are tax free.

Account investment, maturity, and termination procedure?

For an account opened under SSY scheme, following are the regulations:

You will have to deposit in this account minimum of Rs 1000/- max Rs 1, 50,000/- every year continuously for 15 years beginning from the date you have opened the SSY account.

A SSY account will mature/terminate at 21 years, beginning from the date of opening the account.

When the girl child for whom the SSY account has been opened turns 18 years old, or passes 10th standard whichever happens 1st. Maximum up to 50% of the deposit in the account, can be withdrawn for higher education of the girl child. This withdrawal is irrespective of the date on which the account was opened. It is related to the age of the girl child, not the age of the account.

Once the SSY account matures it will stop earning interest, irrespective of whether it is closed or not.

How is 50% of deposit for withdrawal calculated?

Under SSY, no premature withdrawal is allowed, except when required for the girl child’s higher education. In this case partial withdrawal, subject to maximum 50% of the deposit amount can be done. For this purpose the 50% of deposit will be calculated by the balance standing at the end of the preceding financial year can be taken after account holder’s attaining age of 18 years.

Keep in mind the actual withdrawal permitted will be equivalent to the fees payable, and fee receipt will have to be produced to establish the same.

Is the Rate of Interest fixed or flexible?

Rate of interest is not fixed, it is flexible. Every quarter the Rate of Interest will be specified by the Government of India. For the current quarter rate of interest is 8.4%, also the rate of interest will be reviewed every quarter, and can be changed.

Is there any fixed deposit schedule?

No there is no fixed deposit schedule.

  • You need to invest minimum of Rs 1,000/- per year in each of the SSY account opened by you.
  • This 1000/- Rs you can deposit anytime during the year, in any amount. 100 each month, 1000 in one go, 500 bi-monthly, anyway you wish too.

Who will the maturity amount be paid to, and when?

The maturity amount will be paid to the girl child for whom the account has been opened only. It will not be paid to the guardian or any other person. It will be paid on culmination of any one of the below specified activities, whichever happens earlier.

    • 21 years since the date of opening the account.
    • When the girl child for whom the account has been opened wants to close it, by establishing ‘intent to marry’