Parents/Legal Guardian can now open account under Sukanya Samriddhi Scheme for Adopted Daughter and girl child can also deposits money into the account, earlier no clears words were written in the official gazette publication for the same. There are many more clarifications and amendments have been made in the scheme which people were seeking since the launch of the scheme in October 2014. Following are the list of changes and clarifications made in Sukanya Samriddhi Scheme this year.
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- Changes in Sukanya Samriddhi Scheme
- 1. Adopted Child can be Account holder
- 2. Online Deposits are Integrated
- 3. Girl Child (account holder) can also deposit
- 4. Interest Rate and Calculation
- 5. NRI cannot open or hold account
- 6. Deposit time period from 14 to 15 years
- 7. Penalty for not depositing of Minimum Amount
- 8. Partial Withdrawal for Education
- 9. No Interest after maturity
- 10. Account Transfer is Free of Cost
- 11. Duplicate Passbook
- 12. Account Closure or Premature Withdrawal
Changes in Sukanya Samriddhi Scheme
1. Adopted Child can be Account holder
At the time of launching the scheme no clarification was there on whether parents/legal guardian can open account for biological girl child only or for adopted child also.
Government has now clarified that account under Sukanya Samriddhi Scheme can be opened for biological as well adopted girl child. However, limit of maximum number of account is restricted to one account per girl child and a parent/legal guardian can open account for maximum of two girl child.
2. Online Deposits are Integrated
Considering the wide usage of technology, Government has integrated electronic deposit facility under Sukanya Samriddhi Scheme provided that the post office or bank has access to CBS facility (Core Banking Solution). Earlier deposits could be made only through cash, cheque and demand draft but now one can use online payment mode or avail ECS facility to deposit into the account.
3. Girl Child (account holder) can also deposit
In case Girl child has some special skills and earning through it like child modelling, advertisement or acting etc. she can also deposit into her account. Earlier only parent/legal guardian was allowed to deposit but now even account holder (girl child) can deposit. However, there is no clarification on tax benefit on the deposits made by girl child.
Under clubbing provision except the child possess special skills, earning of the child is to be clubbed with the guardian and taxed at the normal rates. Only a deduction of Rs.1,500 per child is allowed to be reduced from the child?s income.
4. Interest Rate and Calculation
Together with other small savings schemes, interest rate on SSA shall be declared every quarter and the interest shall be compounded yearly on the lowest balance of each month from the close of the 10th day and the end of the month.[AdSense-A]
In simple words, deposits made on or before 10th of the month shall fetch interest. So please keep in mind to make deposit on or before 10th to earn interest in that month.
Maximum of Rs.1.50 lakhs can be deposited per annum per account. Deposits exceeding this threshold limit will not earn interest and the excess amount can be withdrawn any time during the year.
5. NRI cannot open or hold account
A strict norm has been added that an account under Sukanya Samriddhi Scheme cannot be opened in the name of a non-resident girl child. However her parent/legal-guardian may be Indian Resident but what matters according to amendment is that girl child should be Indian Resident to open account.
Even after opening of account, the residential status of girl child changes from Indian Resident to NRI, her Parent/legal guardian is required to intimate post-office or bank within 1 month of change of her residential status and close her account. If the same is not done, the account shall be deemed close from the date of change of residential status and any interest credited after that date will be reversed.
6. Deposit time period from 14 to 15 years
Keeping the maturity period same at 21 years, Government has extended the time period of making deposits by 1 year i.e. from 14 years to 15 years. Earlier, deposits were to be made for 14 years from the year of opening of account but now deposits have to be made for 15 years from the year of opening and from 15th year to 21st year account will fetch interest.
7. Penalty for not depositing of Minimum Amount
Minimum of Rs.1,000 is to be deposited per annum for 15 years but in case the minimum amount is not deposited than the account shall be tagged as ?Account in Default?. A nominal penalty of Rs.50 together with the outstanding deposit amount needs to be deposited to regularize such default account.
As per new norms, if such default account is not regularized and remains default for 15 years than interest on the whole deposit amount (since the beginning of the account) shall be calculated at Post Office Savings Bank interest rate prevailing at the time of maturity.
However, the default is occur due to death of the parent/legal guardian of the girl child, than the above rule would not be applicable and interest will be calculated as per normal Sukanya Samriddhi Scheme interest rate.
8. Partial Withdrawal for Education
Amount up to 50% of the balance in the account at the end of the preceding financial year is allowed to withdrawn for the purpose of higher education of the account holder. For example if the application for withdrawal is given in May 2016, balance on 31st March, 2016 is to be consider for calculation of 50%.
To apply for withdrawal, account holder must complete the age of 18 years or has passed tenth standard, whichever is earlier (earlier partial withdrawal for higher education was allowed only at completion of 18 years of age). The application must be accompanied with the documentary proof of admission in Educational Institute and fee details (slip) from such institute.
In case the fee is less than 50% of the account balance than withdrawal amount is limited to the fee amount. The withdrawal can be made as one lump-sum or in installment basis which cannot exceed one per year subject to maximum for 5 years.
9. No Interest after maturity
The maturity period of the account is 21 years from the year of opening and shall be extended but no interest will be paid in the extended period i.e. after completion of 21 years from the date of opening of account.
Earlier, if the account was not closed after maturity, the account balance was supposed to fetch interest till the closure of the account but now no interest shall be paid after maturity of the account.
10. Account Transfer is Free of Cost
In case of relocating to other place, Parent/legal guardian should submit account transfer application and furnish proof of shifting of residence where the account is being shifted to transfer account from post-office to bank or vice-versa at free of cost. However, at a nominal fee of Rs.100, account can be transferred from post-office to bank or vice-versa in any circumstance but such transfer is limited to one per year.
The transfer can also be initiated electronically if the post office or the Bank where the account is maintained has access to the facility of CBS.
11. Duplicate Passbook
In case the original pass book is lost, misplaced, mutilation etc. duplicate pass-book can be obtained by the account holder or parent/legal guardian from the bank or post-office where the account is maintained on payment of Rs.50.
Read: PPF Vs. SSA
12. Account Closure or Premature Withdrawal
Sukanya samriddhi scheme account can be prematurely closed in the event of the medical emergencies of the account holder but only after completion of 5 years from the opening of account. If the withdrawal is made before completion of 5 years, than the account shall be treated as normal savings account and interest at normal post-office or bank savings account rate will be given.
Earlier premature closure of the account was allowed only after marriage of the girl provided she is not less than 18 years on the date of marriage but now account can be closed prematurely if the account holder has completed 18 years of age and intending to get married however such preclosure cannot be made before one month of the date of the marriage or after three months from marriage. Age proof of the account holder is to be submitted to prove that the girl child has completed 18 years of age. Earlier only an affidavit for the age was required.
Final Words of Wisdom
Despite of some relaxation and some strictness, prevailing interest rate of 8.60% on SSA is higher than any other savings schemes be it PPF, FD, Recurring Deposits etc. Further, the tax-free treatment of Sukanya Samriddhi Scheme makes it the best bet and must have for the girl child aged 10 years or less.[AdSense-B]