Tax Saving Tuesday: SSY

A deep dive into the Sukanya Samriddhi Yojana

Hello, and welcome to another edition of The Stable Investor!

Last week, we explored a fascinating tax-saving instrument, the National Pension Scheme. With Women’s Day coming up this week, we continue with the third instalment of Tax Saving Tuesdays with a breakdown of another particularly popular scheme, the Sukanya Samriddhi Yojana (SSY).

A Broad Overview of SSY

The Sukanya Samriddhi Yojana (SSY) was launched in 2015. It is a government-backed savings program designed specifically to empower girls. It falls under the Beti Bachao, Beti Padhao initiative, promoting gender equality by encouraging financial security for future generations of daughters.

SSY offers one of the highest interest rates among small savings schemes backed by the Indian government. The current interest rate for FY 2023-24 is 8.2% compounded annually.

Of course, tax treatment is a major attraction. Deposits made towards SSY qualify for tax deduction under Section 80C of the Income Tax Act up to ₹1,50,000. Additionally, the interest earned in the SSY account is free from Income Tax under Section -10 of the I.T. Act.

A massive 21-year lock-in period makes use of compounding to give significant returns. Here’s an example of returns you would earn if you invested ₹10,000 annually for 21 years in SSY. That’s more than 200% in returns!

The Finer Details

A girl child below 10 years of age can have one SSY account opened by her parent or legal guardian. The SSY account matures 21 years after the opening date or upon the girl's marriage after she turns 18. Partial withdrawal for the girl's higher education is allowed after she reaches 18 years of age.

There's no fixed minimum deposit for opening the account, but a minimum of ₹250 needs to be deposited each financial year to maintain activity. While annual deposits are required for the first 15 years, the account continues to earn interest even without further deposits until maturity.

Another major benefit is that the account can be created in branches of authorized banks or post offices throughout India and can be conveniently transferred across branches.

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The Sukanya Samriddhi Yojana is a major step towards empowering women in India. And as a tax-saving instrument, it offers attractive deductions along with high rates. If you have a girl child, this scheme might be worth exploring to create a corpus for their future.

That’s all for today, see you here next week!

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Before we leave, we have a surprise for you!

A quiz that will have 4 questions, one every week, all linked together by a certain theme.
Write back to us guessing the answer and the theme. A lucky winner who guesses correctly will get a free hamper from us.

Quiz Question
Headquartered in New Delhi this company was created by the Government in 1986 to oversee telephone services in Delhi and Mumbai. Mumbaikars will instantly recognise their iconic office in Bandra which has a mural of Indian film pioneer Dadasaheb Phalke.
Name the company.

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On another note, our partner bank Shivalik SF Bank has recently increased its rates and currently offers the highest rate on our app at up to 9.20% p.a.

Best,

Team Stable Money