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Tax Planning through savings and investments

Sukanya Samridhhi Yojna

Launched as a part of the ‘Beti Bachao Beti Padhao’ campaign in 2015, Sukanya Samriddhi Yojana is a small deposit scheme for the girl child. The investment obtains tax benefits under section 80C of the Income Tax Act. Furthermore, the interest accrued and the maturity benefit is also exempt from tax. 

 

The interest earned on this account, which is compounded annually, is also tax-free under Section 10 of the Income Tax Act.

 

The parents are required to invest a sum of money at regular intervals to earn interest on it. The rate of interest is decided by the government of India. The interest is accrued quarterly and is payable on maturity. The scheme has a lock-in of 21 years and matures automatically after the expiry of 21 years. 

 

A minimum deposit of ₹250 needs to be paid every year for 15 years. In case of failure to pay this minimum amount, the account gets disconnected. The account can then be reactivated by paying a penalty of ₹50 along with the original deposit of ₹250. 

 

Important aspects of a Sukanya Samriddhi Yojana account: 

  1. Parents or legal guardians in the absence of parents can open a Sukanya Samriddhi Yojana account
  2. Only girl children can claim the benefits of the scheme
  3. Only one account can be opened for one girl child
  4. Parents can hold two Sukanya Samriddhi Yojana accounts simultaneously for two girl children
  5. Minimum entry age- at birth
  6. Maximum entry age 10 years
  7. Minimum deposit per year - 250
  8. Maximum deposit per year-150,000 At the end of every year, a payment of 250 has to be made over and above the minimum annual deposit to confirm the reviving of the account
  9. Due to the untimely death of the account holder, the account can be closed prematurely.
  10. Deposits can be made in the form of cash, cheque or demand draft
  11. When the girl child reaches 18 years of age, the account holder is allowed to withdraw 50% of the accumulated amount.

Well, at the heart of everything is the fact that your money grows into a lump sum so that your girl child can benefit from it. But what is the rate at which it grows?

 

The chart below shows the historic interest of the Sukanya Samriddhi Yojana since the scheme was announced:

 

How to invest in Sukanya Samriddhi Yojana? 

 

All public and private sector banks, as well as the post office, offer the benefit of the Sukanya Samriddhi Yojana account. All you need is your KYC documents and an initial deposit cheque to open this account.

 

If you open the Sukanya Samriddhi Yojana account with a bank, you can check the balance through your net banking. However, the post office still does not provide the benefit to check the balance online. You will have to visit the post office and get your passbook updated to see the balance.

 

You will find a lot of calculators online to calculate how much you should save every month. You can fix the final amount that you will need when your child grows up and then work backwards to understand the yearly amount required to be saved to reach that desired figure.

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