Sukanya Samriddhi Yojana withdrawal interest rates

Sukanya Samriddhi Yojana (SSY) is one of the most popular long-term investment instrument among people. The small saving scheme by India Post offers one of the highest interest rates compared to many other schemes. Note that Sukanya Samriddhi Yojana is one of the
nine small saving investment schemes, run under the Ministry of Communications.

An SSY account can be opened for a girl child before she turns 10 years. In order to open an SSY account for a girl child, a minimum of Rs 1,000 is required to be deposited. A maximum of Rs 1.5 lakh can be deposited in a financial year, under this scheme. The interest rate on the deposit is revised quarterly by the government. Note that this interest is compounded, and credited annually. 

SSY account can be opened for up to two girl children or three in case of twin girls as second birth or the first birth itself results in three girl children. Maximum period up to which deposits can be made is 15 years from the date of opening of the account.

Here's everything you need to know about the scheme:

Documents required:

SSY Account Opening Form

Birth Certificate of the girl child (mandatory)

Identity proof (as per RBI KYC guidelines)

Residence proof (as per RBI KYC guidelines)

1. Interest rate: Currently, this scheme offers an interest rate of 8.4 per cent per annum, which is the second-highest interest rate among all small savings schemes offered under the post office schemes.

2. Maturity and withdrawal: From the date of opening of the account, the scheme matures after 21 years. However, premature withdrawal can be made on certain occasions such as for the marriage of the girl child, for higher education etc. Premature withdrawal can be made once the child attains the age of 18. Premature withdrawal is limited to 50 per cent of the balance that was at the end of the preceding financial year.

3. Deposits: Deposits can be made to SSY account till the account holder completes 14 years from the date of opening of the account, even though maturity is 21 years from the date of opening of the account.

4. Maturity proceeds: The maturity proceeds are paid to the girl child holding the account, once the account matures. The account balance along with accrued interest at the time of maturity is paid directly to the account holder. The interest is paid even after maturity, unlike other financial schemes which makes this scheme even more popular among risk-averse investors.

So, under this SSY scheme, if the investor does not close the account after maturity, the interest will be paid to the account holder till the final closure of the account.

5. Tax benefits: The scheme offers Income Tax benefits as well. As per the I-T Act, income tax is exempted from the contribution made to this account under Section 80C. The scheme offers tax exemption on the interest and also at the time of withdrawal. Since this scheme falls under EEE (exempt, exempt, exempt), the contribution made, the interest income and maturity proceeds are all tax-exempt.

6. Flexibility: SSY account offers a lot of flexibility to the investors. The account can be opened with a minimum deposit of just Rs 1,000, which can be continued with any amount in multiples of Rs 100. Every Financial Year, one needs to deposit a minimum of just Rs 1,000 needs to keep the account operative.

As notified by the government, the interest is compounded annually with the option for monthly interest pay-outs to be calculated on balance in completed thousands. It is worth mentioning that irregular payment, revival of account attracts a penalty of Rs 50 per year along with the minimum specified amount per year.