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Sunday, 22 March 2015

Sukanya Samriddhi Account (SSY) Pre-Mature Closure And Partial Withdrawal Rules

The duration of the Sukanya Samriddhi account is 21 years from the date of the opening of the account. But there are some scenarios when SSY account is permitted to be closed prematurely.

Beneficiary getting married

SSY account can be closed if marriage of the account holder (girl child) takes place before the completion of 21 years of SSY account.

Earlier SSY account has to be closed in case of marriage but as per new rules, in case of marriage, pre mature closure of the SSY account is allowed with in a month before the marriage or with in three months after the marriage. If SSY account is not closed with in that window, in case of marriage, then it has to be continued till maturity (i.e. 21 years).

If SSY account has to be closed in case of marriage proper proof has to be given that girl is over 18 at that time

Untimely death of the account holder

In the unfortunate event of death of the account holder (girl child), the account shall be closed immediately on production of death certificate issued by the competent authority. In that case the balance at the credit of the account shall be paid along with the accrued interest till the month preceding the month of premature closure of the account, to the guardian of the account holder.

Hardship to the account holder

The other case when Sukanya Samriddhi Yojana account can be closed prematurely is when the central government is satisfied that operation of the account or continuation of the account is causing undue hardship to the account holder (guardian). Authorities may allow pre-mature closure of the SSY account only in cases of extreme compassionate grounds such as medical support in life threatening diseases, death etc. The application for pre-mature closure in this case has to be given with the proper reason.

There is one condition though in this case, pre mature closure is permitted only after the completion of five years of the SSY account opening.

Resident status change for the beneficiary

SSY account is only for resident Indian. After the opening of SSY account, if the account holder becomes a NRI or non-citizen; as per rule no interest shall be deemed to accrue to the account from the day of change in status and the SSY account shall be deemed to be closed prematurely from that date. The intimation for the change in residential status shall be given by the guardian or the accout holder to the concerned post office or bank with in the period of one month from the date of change in citizenship status.

Pre-mature closure for any other reason

Apart from all these scenarios premature closure of the SSY account may be permitted anytime after the opening of an account but in that case the whole deposit shall be eligible only for the interest rate prescribed for the Post Office Savings Bank.

Partial withdrawal rules

Partial withdrawal is permitted, to meet the financial requirements of the account holder for the purpose of higher education.

In this cases partial withdrawal up to fifty percent of the balance at the credit, at the end of preceding financial year shall be allowed. This partial withdrawal will be allowed only when the account holder girl child attains the age of eighteen years or has passed 10th standard, whichever is earlier.

Let's clarify it with an example - If an account is opened for a girl child whose birth date is 10th Aug 2014 then her 18th birthday would be on Aug 10th 2032. Now if fifty percent withdrawal is requested then the sanctioned amount would be the fifty percent of the amount in the SSY account as of 31st march, 2032.

In case you are opting for partial withdrawal to cover higher educaton expenses you need to provide documentary proof in the form of a confirmed offer of admission of the account holder in an educational institution or a fee-slip from such institution clarifying such financial requirement.

Partial withdrawal may be made as one lump-sum or in istalments, not exceeding one per year, for a maximum of five years.

The partial withdrawal is restricted to the actual demand of fee and other admission charges as per the submitted document. So if amount for fee and other charges is coming to less than 50% of the account balance then you are eligible for partial withdrawal upto the amount for fee and other charges.

Points to note -

Pre-mature closure of the account is permitted in case of the death of the account holder or when it is causing extreme hardship to the depositor to carry on the operation of the account.
NRIs or non-citizens are not permitted to hold SSY account. In case there is a change of status in citizenship of the account holder, SSY account shall be considered closed.
Partial withdrawal up to 50% is permitted in case of higher education of the girl child.
Partial withdrawal is allowed only when the account holder girl child attains the age of eighteen years or has passed 10th standard, whichever is earlier
After the marriage of the girl child SSY account can be closed even if 21 years of SSY account are not completed.

That's all for this topic Sukanya Samriddhi Account (SSY) Pre-Mature Closure And Partial Withdrawal Rules. If you have any doubt or any suggestions to make please drop a comment. Thanks!

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Friday, 20 March 2015

Sukanya Samriddhi Yojana (SSY) Account Duration

The duration of the SSY account is 21 years. Please note that it is 21 years from the date of the opening of the account not when the girl attains the age of 21 years.

There is one exception to the rule - If the marriage of the account holder (girl child) takes place before the completion of those 21 years, then you have an option to close the SSY account.

Earlier SSY account has to be closed in case of marriage but as per new rules that mandatory closing clause has been tweaked.

Now a window is provided when SSY account can be closed in case account holder is getting married. The duration in which the account can be closed is; with in one month before the marriage or with in three months after marriage.

So there is a window of four months in which SSY account can be closed in case of marriage. If SSY account is not closed with in that duration then it has to be continued till maturity (i.e. 21 years).

In the case of the closing of the account because of the marriage of the account holder, the account holder shall have to give an affidavit to the effect that she is not less than eighteen years of age as on the date of closing of the account, in that way it also ensures that at the time of marriage girl is at least 18 years old :).

Refer Sukanya Samriddhi Account (SSY) Pre-Mature Closure And Partial Withdrawal Rules to see other scenarios when SSY account can be closed prematurely.

Deposit for first 14 years only

Deposit in the Sukanya Samriddhi Account needs to be done for first 14 years only from the date of opening of the account, i.e. deposit of a minimum of Rs. 1,000 and a maximum of Rs. 1,50,000 has to be done for 14 years only, since the maturity of the account is after 21 years (apart from the exception of the marriage of the account holder) which means for the last 7 years of the SSY account no deposit has to be made. Account will keep earning the prevailing interest rate till it matures.

Closure of the account after maturity

On maturity of the Sukanya Samriddhi Account the principal along with the accrued interest shall be payable to the account holder on the production of -

Withdrawal Slip.
SSY passbook.

What if the Account is not closed at the time of maturity

In case account is not closed when it matures (i.e. after 21 years of opening of the account). No interest will be paid once the SSY account completes twenty-one years from the date of its opening. Note that earlier rule was prevailing interest rate for the Sukanya Samriddhi Yojana shall be payable on the balance in the account till final closure of the account. Now that won't happen and no interest will be paid.

Points to note -

The duration of SSY account is 21 years from the date of opening of the account.
It can be closed before that period of 21 years if girl is getting married before completion of that duration of 21 years. In that case Account holder has to submit an affidavit to the effect that she is not less than eighteen years of age as on the date of closing of the account
If SSY account is not closed even after 21 years it won't fetch any interest after the completion of 21 years.

That's all for this topic Sukanya Samriddhi Yojana (SSY) Account Duration. If you have any doubt or any suggestions to make please drop a comment. Thanks!

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Tuesday, 10 March 2015

Sukanya Samriddhi Yojana (SSY) Account Interest Rate

For the Financial Year 2015-16 government has declared Interest Rate of 9.2% on the Sukanya Samriddhi Yojana. Please note that the interest rate is not fixed and linked to the government bond yield. SSY will offer 75 basis points higher than the 10-year government bond yield for the previous year.

Update: Earlier the interest rates for the small saving schemes like PPF, SSY, NSC used to be declared annually once. From FY 2016 - 2017 the rate of interest will be reviewed every three months so interest rate on small saving schemes will be fixed on quarterly basis and may change every quarter.

As per latest update govt. has slashed rate for small saving schemes by 0.2 percentage point for the quarter January, 2018 - March 2018 from the rates applicable in the previous quarter. That means interest rate for SSY will be 8.1% in that period.

Interest Rates for SSY

April 1, 2016 - June 30, 2016 : 8.60%
July 1, 2016 - September 30, 2016 : 8.60% 
October 1, 2016 - December 31, 2016 : 8.50% 
January 1, 2017 - March 31, 2017 : 8.50%
April 1, 2017 - June 30, 2017 : 8.40%
July 1, 2017 - September 30, 2017 : 8.30%
October 1, 2017 - December 31, 2017 : 8.30% 
January 1, 2018 - March 31, 2018 : 8.10%

Points to note -

Interest rate for SSY is not fixed and subject to change every quarter from FY 2016 - 2017.
One of the highest rates of interest offered by Government on small savings scheme.
Interest earned is tax free.
PPF offers 25 basis points higher than the yield of 10-year government bonds where as SSY offers 75 basis points higher than the yield of 10-year government bonds so Sukanya Samriddhi Yoajana may always give a little higher return than PPF.

That's all for this topic Sukanya Samriddhi Yojana (SSY) Account Interest Rate. If you have any doubt or any suggestions to make please drop a comment. Thanks!

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Deposit Rules For Sukanya Samriddhi Yojana (SSY) Account

In this post we'll see what are the deposit rules for Sukanya Samriddhi Accout, for how long do you need to deposit in the SSY account and what is the best time to make a deposit in SSY.

Deposit while opening SSY account

The account can be opened with an initial deposit of minimum of Rs.1,000. Thereafter any amount in the multiples of Rs.100 may be deposited with a requirement of minimum deposit of Rs.1,000 and maximum deposit of Rs. 1,50,000 (Current 80C limit) in a financial year.

Refer: How and Where to Open Sukanya Samriddhi Yojana (SSY) Account to know more about opening SSY account.

Limit on number of deposits

There is no limit on number of deposits either in a month or in a Financial year subject to the maximum deposit of 1,50,000 and minimum deposit of Rs. 1,000 in a financial year.

Mode of deposit

The deposit mode may be -

Cash
Cheque or demand draft drawn in favour of the Postmaster of the concerned post office or the Manager of the concerned bank where the account is opened. That cheque or DD needs to be endorsed on the back by depositor's signature and indicating the name of the account holder and the account number.
Through e-transfer in the concerned post office or bank.

When deposit is done by cheque or demand draft, the date of encashment of the cheque or demand draft shall be the date of credit to the account.

Deposit for first 14 years only

Refer Sukanya Samriddhi Yojana (SSY) Account Duration to get more information about the duration of SSY account.

Best time to deposit in SSY

The interest on balance in the SSY account is compounded annually and is credited at the end of the year. But the point to remember is that the interest calculation is done every month for that interest is calculated on lowest balance in account between 10th and last day of the month.

This means, if you want your deposit to get interest for the month it was deposited, you should make that deposit in SSY account by the 10th of that month.

Discontinuation of SSY Account

If minimum Rs. 1,000 is not deposited in a financial year, account will become discontinued and can be revived on a payment of a penalty of Rs. 50 per year along with minimum deposit amount (Rs. 1,000) for the year(s) of default.

Points to note -

Minimum deposit limit in a financial year is Rs. 1,000 and maximum limit is Rs. 1,50,000.
The maximum limit is linked to the exemption provided under Sec 80C, if exemption limit is increased under 80C maximum limit allowed under Sukanya Samriddhi Account may increase too.
In case of 2 accounts maximum contribution to both accounts combined should not exceed the maximum limit of Rs. 1,50,000.
Thought the SSY account matures after 21 years, but deposit has to be done for the first 14 years only.
Failure to deposit the minimum specified amount of Rs. 1,000 in a financial year will lead to the discontinuation of account.

That's all for this topic Deposit Rules For Sukanya Samriddhi Yojana (SSY) Account. If you have any doubt or any suggestions to make please drop a comment. Thanks!

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Monday, 9 March 2015

Eligibility For Opening a Sukanya Samriddhi Yojana (SSY) Account

There are certain rules and restrictions for opening and operating Sukanya Samriddhi Yojana account. It is always advisable to check the eligibility criteria for any scheme to ensure compliance. In this post we'll see who is eligible for opening a Sukanya Samriddhi Yojana (SSY) account.

Only for girl child

Well, the biggest restriction is you have to be a parent of a girl child not older than 10 years :). OK apart from natural guardian(s), legal guardian(s) can also open an account but note that SSY account can be opened for a girl child only (no older than 10 years).

Grace Period

Only for the financial year 2015-2016 a grace period of one year was provided. With this, a girl child who is born between Dec. 2nd, 2003 and Dec 1st, 2004 was eligible to open an account by Dec 1st, 2015 at the latest.

How many accounts can be opened

A parent can open an account for a maximum of two daughters, but the total investment in the two accounts cannot exceed Rs 1.5 lakh a year.

Refer How and Where to Open Sukanya Samriddhi Yojana (SSY) Account to see the formalities for opening SSY account.

Third SSY account is permitted

Though natural or legal guardian(s) are allowed to open the account for two girl children only there is an exception to the rule. The third Sukanya Samriddhi Account is permitted in the event of birth of twin girls as second birth or if the first birth itself results in a triplet of girls. In this case, certificate from the competent medical authorities, where the twins or triplets were born, has to be produced.

Points to note -

Legal /natural guardian(s) can open account in the name of the girl child
Account can be opened only if the girl child is 10 years of age or less.
Grace period of one year provided only for this year (2015)
Budget 2015 has made this scheme quite attractive for the investors as the interest income has been exempted from tax.
In case you have a girl child less than 10 years of age and you already have a PPF account, Sukanya Samriddhi Yojana account should also be opened and some amount deposited in it as it is also EEE and provides better interest rate than PPF. As per the existing rules prevailing interest rate on SSY will be 0.5% more than the interest rate on PPF.

That's all for this topic Eligibility For Opening a Sukanya Samriddhi Yojana (SSY) Account. If you have any doubt or any suggestions to make please drop a comment. Thanks!

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How and Where to Open Sukanya Samriddhi Yojana (SSY) Account

Sukanya Samriddhi Yojana account can be opened in any post office or designated branches of PSU banks with a minimum investment of Rs 1,000. Few private banks are also authorised to open SSY account. There was a circular issued by RBI which provides the list of all the banks authorised to open SSY account.

List of Public Sector Banks

Allahabad Bank
Andhra Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
IDBI Bank
Indian Bank
Indian Overseas Bank
Oriental Bank of Commerce
Punjab National Bank
Punjab & Sind Bank
State Bank of India
State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of Mysore
State Bank of Patiala
State Bank of Travancore
Syndicate Bank
UCO Bank
Union Bank of India
United Bank of India
Vijaya Bank

List of Private Sector Banks

Axis Bank Ltd.
HDFC Bank
ICICI Bank Ltd.

Who can open/operate SSY Account

The account shall be opened and operated by the natural or legal guardian of a girl child, till the girl child in whose name the account has been opened, attains the age of ten years.

On attaining age of ten years, the account holder (girl child) may herself operate the account. However, deposit in the account may be made by the guardian or any other person or authority.

Refer Eligibility For Opening a Sukanya Samriddhi Yojana (SSY) Account to check the eligibility criteria for opening SSY account.

Document required for opening an account

Sukanya Samriddhi Yojana account opening form.
Birth Certificate of the girl child.
Identity proof of the guardian.
Address proof of the guardian.

Passbook

On opening an account, the depositor shall be given a pass book bearing the date of birth of the girl child, date of opening of account, account number, name and address of the account holder and the amount deposited.

The pass book shall be presented to the post office or bank at the time of depositing money in the Sukanya Samriddhi Account and also at the time of final closure of the account on maturity.

Best time to open a SSY account

The ideal age when the Sukanya Samriddhi Account (SSY) should be opened for a girl child is before the child completes 1 year. Since Sukanya Samriddhi Yojana has been started as part of "Beti Bachao Beti Padhao" campaign, it is clear that the primary aim of this scheme is investment in a girl's higher studies.
The duration of SSY is 21 years from the date of opening the account. There is also an option to withdraw partially; up to 50% of the amount only after the girl child attains the age of 18.

It gives a clear indication that the idea is to support higher education and then marriage of the girl child.

Refer Sukanya Samriddhi Yojana (SSY) Account Duration to know the duration related rules for the SSY account.
Refer Sukanya Samriddhi Account (SSY) Pre-Mature Closure And Partial Withdrawal Rules to know about the partial withdrawal rules.

If we go by the common schooling pattern in India, where kids start going to a school at the age of 3, starting with 3 years of kindergarten followed by 12 years of schooling it makes 18 years when they can start for higher studies. Thus, having a restriction to partially withdraw money only after girl child completes 18 makes sense.
Again, if we go by the current marriage trends as depicted by the 2011 census - 92% of women were married by the time they reached 25 years of age (Source - http://timesofindia.indiatimes.com/india/Census-2011-data-In-33-marriages-women-werent-18/articleshow/46790489.cms). Thus maturity of SSY after 21 years makes sense too.

Points to note -

One account per girl child is allowed. A parent can open maximum 2 accounts for 2 daughters.
The account may be opened with an initial deposit of one thousand rupees.
If minimum Rs 1000/- is not deposited in a financial year, account will become discontinued.
Deposits in an account may be made till completion of fourteen years, from the date of opening of the account.

That's all for this topic How and Where to Open Sukanya Samriddhi Yojana (SSY) Account. If you have any doubt or any suggestions to make please drop a comment. Thanks!

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Know About Sukanya Samriddhi Yojana

Sukanya Samriddhi Yojana was launched in January, 2015 as part of the Prime Minister's Beti Bachao Beti Padhao initiative. SSY account can only be opened for a girl child with a primary aim to provide for the higher education and marriage expenses of a girl child.

Amount invested in SSY can be claimed for deduction under section 80C upto the maximum exemption limit of Rs. 1,50,000. Which means one can invest maximum Rs. 1,50,000 in Sukanya Samriddhi Yojana with in a financial year.

In the budget 2015-16 FM proposed to make the income from the Sukanya Samriddhi Yojana scheme tax free i.e. interest earned and the maturity amount would not be taxed. Thus Sukanya Samriddhi Yojana becomes another EEE saving scheme just like PPF.

There are certain rules for opening and operating SSY account, follwoing links gives information about those rules. So lets view different scenarios -