The Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme in India, designed to promote savings for the education and future of girl children. Launched under the “Beti Bachao, Beti Padhao” initiative, it offers parents or guardians an opportunity to set aside funds specifically for a girl child’s education and marriage expenses.

TLDR; SSY is a good (very) long term investing scheme for the girl child. It's great from a taxation POV since the deposits you make are eligible for tax deductions every year (under 80C), plus the proceeds withdrawn after the lock-in period are also tax exempt. Consider SSY if you have a daughter, and are looking for long term stable returns. Of course, since you have a long term investing horizon here, consider equities or equity mutual funds as well!

Here are the details you need to know about SSY:

💁‍♀️ Eligibility and Account Setup

• Age Requirement: The account can be opened any time after the birth of a girl child, up to the age of 10.

• Who Can Open: A parent or legal guardian can open and operate the account on behalf of the girl.

• Number of Accounts: Only one account can be opened per girl child, with a maximum of two accounts allowed per family (exceptions are made in the case of twins or triplets).

🏦 Deposit Details

• Minimum Deposit: ₹250 per financial year.

• Maximum Deposit: Up to ₹1.5 lakh per financial year.

• Frequency: Deposits can be made multiple times in a year but should total within the prescribed limits.

• Deposit Duration: Deposits are required for 15 years from the account opening date, after which no further contributions are necessary. The account will continue to earn interest until maturity.

📈 Interest Rate

• The interest rate is set by the government quarterly and is generally higher than most other savings schemes, including traditional savings accounts and even some Fixed Deposits.

• For instance, the SSY interest rate has been around 7.6% to 8.5% annually in recent years, compounded annually, though it is subject to change each quarter.

  
  

💰 Maturity and Withdrawals

• Maturity: The account matures after 21 years from the date of opening or upon the girl child’s marriage (after age 18), whichever is earlier.

• Partial Withdrawal: After the girl reaches 18 years of age, up to 50% of the balance can be withdrawn for education purposes.

• Premature Closure: Premature closure is allowed under specific circumstances, such as the account holder’s death or in cases of life-threatening illness, subject to necessary documentation.

🤑 Tax Benefits

• Under Section 80C: Contributions are eligible for tax deductions up to ₹1.5 lakh per financial year under Section 80C of the Income Tax Act.

• Interest and Maturity Amount: Both the interest earned and the final maturity amount are tax-free, providing tax exemptions on deposits, interest, and maturity proceeds under the EEE (Exempt-Exempt-Exempt) tax regime.

📂 Account Opening and Management

• Where to Open: The SSY account can be opened at authorized banks and post offices across India.

• Account Transfer: The account can be transferred from one bank/post office to another across India, making it convenient if the family relocates.

• Passbook: A passbook is provided at the time of account opening, which must be updated for each transaction and used for verification during withdrawals.

✅ Benefits of Sukanya Samriddhi Yojana

• High Interest Rate: SSY typically offers one of the highest interest rates among small savings schemes.

• Secure Investment: Being a government-backed scheme, it offers guaranteed returns and is highly secure.

• Focused Savings for the Girl Child: It helps parents build a sizable fund specifically for their daughter’s future, encouraging financial planning early on.

  
  

😐 Limitations

• Lack of Flexibility in Withdrawals: Withdrawals are restricted until the child turns 18, which can be a limitation in cases of unexpected financial needs.

• Commitment Period: With a 21-year lock-in period, it requires a long-term financial commitment from the investor.

Example of Potential Returns
Suppose a parent deposits the maximum allowed amount of ₹1.5 lakh annually for 15 years, by investing ₹12,500 every month . At an average interest rate of 7.6%, the final maturity amount at the end of 21 years is ₹77.6 lakh! And remember, this is completely tax exempt.

How to Open a Sukanya Samriddhi Account

• Visit an authorized bank or post office.

• Submit a completed application form.

• Provide relevant documents, such as the birth certificate of the girl child, address, and identity proofs of the guardian.

• Make an initial deposit (minimum ₹250).

Key Documents Required

• Birth certificate of the girl child.

• ID proof and address proof of the parent or guardian.

• Any additional documents requested by the bank/post office.

This scheme is ideal for parents and guardians seeking a secure, tax-efficient, and long-term investment for a girl child’s future expenses.