In our previous article, we saw various features of Sukanya Samriddhi Yojana. It was launched by our Prime Minister Narendra Modi in Jan 2015 mainly for higher education and marriage of girl child. It is another Small saving scheme with little higher interest rate i.e 9.1% compounded annually. The budget 2015 brought the tax benefit for the scheme which makes it lucrative for investment by proud fathers of a girl child. Let us understand the interest and tax exemptions under this scheme.
The scheme has a minimum and maximum investment limits. The minimum being Rs. 1000 and maximum of Rs. 1.5 lacs per financial year. The interest on this scheme is fixed at 9.1% for FY 2014-15 and will be subject to changes every year.
Tax Benefit on Sukanya Samriddhi Account
Any contributions to Sukanya Samriddhi Account is deductible under section 80C of Income tax Act,1961 upto Rs.1.5 lakhs. However this amount will be counted in the overall limit of 1.5 lacs under 80C.
The Interest earned on this scheme is also exempt from tax. So it makes it another scheme other than PPF to have exemption on interest as all other schemes like NSC KVP or Fixed deposits are subject to Income Tax on the interest earning.
The maturity amount or the withdrawal from the scheme is also exempt from tax.
Who can claim the tax Benefits
The Depositor is an individual who deposits amount on behalf of a minor girl child in this account. Such depositor will be the guardian which are one of the following
- either father or mother
- In case, where neither parents is alive or are incapable of acting, a person entitled under the law for the time being in force to have the care of the property of the minor.
As such, it becomes an EEE scheme with exemption in Income Tax on deposits, exemption in interest earned and exemption on the maturity amount. It is important to note that these amendments are applicable only from April 01, 2015. With these benefits it make it one of the most lucrative small saving scheme with highest rate of interest and all sort of tax benefits.