The costs of higher education and marriage are often overwhelming for middle-class and lower-middle-class families, leading to significant stress and financial strain. However, with proper planning and early investment, these expenses can be managed effectively. One such scheme that can help parents build a substantial fund for these future costs is the Sukanya Samriddhi Yojana (SSY). This small savings scheme, backed by the government, offers an excellent opportunity for parents to secure their daughters' futures.
Key Features of Sukanya Samriddhi Yojana (SSY)
The Sukanya Samriddhi Yojana is designed to encourage long-term savings for the future of girls. Here are the important aspects of the scheme:
- Eligibility: A parent can open an SSY account for their daughter before she turns 10 years old. A family can open accounts for up to two daughters. In the case of twins or triplets, more than two accounts can be opened.
- Contribution Limits: In a single financial year, parents can contribute a minimum of Rs 250 and a maximum of Rs 1,50,000 to the account. Contributions can be made either in lumpsum or through monthly instalments.
- Investment Period: Contributions can be made for a maximum of 15 years from the date the account is opened.
- Tax Benefits: SSY comes with an EEE (Exempt, Exempt, Exempt) tax status, meaning investments, interest earned, and the maturity amount are all tax-free.
- Interest Rate: The scheme offers a competitive interest rate, currently set at 8.2% per annum. The interest rate is reviewed quarterly by the government and is applied on a compound annual basis.
- Withdrawal Rules: The scheme has a lock-in period of 21 years. However, once the daughter turns 18, parents can withdraw up to 50% of the maturity amount for her higher education or marriage expenses. The remaining amount can be withdrawn when the daughter turns 21.
- Tax Deduction: Parents can avail of tax deduction benefits up to Rs 1.50 lakh under Section 80C of the Income Tax Act for the contributions made to the Sukanya Samriddhi Yojana.
Building a fund of Rs 70 lakh
To understand the potential of this scheme, let’s look at a practical example. Suppose you open an SSY account for your daughter when she is one year old and contribute the maximum allowable amount of ₹1,50,000 annually. By the time your daughter turns 21, you will have accumulated a total fund of approximately 69,27,578.
Out of this, your total investment will be Rs 22,50,000, while the interest earned will amount to Rs 46,77,578. This impressive corpus can be used for her higher education, marriage, or other future expenses.
The Sukanya Samriddhi Yojana is a highly beneficial scheme for parents looking to secure their daughters' futures. With its tax benefits, attractive interest rates, and structured withdrawal options, it provides a reliable way to accumulate funds for significant life expenses like education and marriage. Parents who start early can ensure that they are well-prepared for these expenses, thus reducing financial stress in the future.
