Sukanya Samriddhi Yojana Tax-Free Small Savings Scheme

for a Girl Child

by SH IV KU KRE JA on MARCH 3, 2015
in IN VE ST MEN TS

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial
planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in
Beti Bachao, Beti Padhao is the mantra with which Prime Minister Narendra Modi
launchedSukanya Samriddhi Yojana on January 22nd this year. Later on, the government
issued a notification to allow 80C exemption equal to the amount invested in the scheme up to
Rs. 1,50,000, which is also the maximum amount one can invest in this scheme in a financial
year.
Now, the Finance Minister in his budget speech has proposed to make the interest component as
well as the maturity proceeds as tax-free. I think this proposal has made this scheme to be the
best small savings scheme available to the Indian investors. Yes, even better than our golden
scheme of Public Provident FUND (PPF). So, what is this scheme all about? Lets check.
Sukanya Samriddhi Yojana is a small savings scheme which can be opened by the parents or a
legal guardian of a girl child in any post office or authorised branches of some of the commercial
banks. The girl child is called the Account Holder and the guardian is called the Depositor in
this scheme.
Before I compare this scheme with PPF, let us first check the important features of this scheme.
Salient Features of Sukanya Samriddhi Yojana
Who can open this account? - Parents or a legal guardian of a girl child who is 10 years of
age or younger than that, can open this account in the name of the child. For initial operations of
the scheme, one year grace period has been provided to make it 11 years of age. With this one
year grace period in age, which is valid up to December 1, 2015, you can get this account opened
for a girl child who is born between December 2, 2003 and December 1, 2004.
9.1% Tax-Free Rate of Interest - This scheme has been flagged off with a 9.1% rate of
interest, higher than that of PPF which stands at 8.7%. But, this rate is not fixed at 9.1% for the