Sukanya Samriddhi Account –
Tax & Other benefits
CA Sandeep Kanoi
Prime Minister Narendra Modi has Launched Sukanya Samridhi Yojna’
(girl child prosperity scheme) with the vision to provide for Girl Child
Education and Her Marriage Expense. Sukanya Samriddhi Account Scheme
is a small deposit scheme for girl child, as part of ‘Beti Bachao Beti
Padhao’ campaign, which would fetch yearly interest rate of 9.1 per cent and
provide income tax deduction Under section 80C of the Income Tax Act,1961.
In this article we have discussed Provisions of this Scheme
alongwith tax and other benefits :-
Date of Commencement of Scheme- Sukanya Samriddhi Account
Scheme is been notified by Ministry of Finance vide Notification No. G.S.R.863(E) Dated 02.12.2014.
Shceme become operational by notification of rules namely ‘Sukanya Samriddhi
Account Rules, 2014’.
Depositor- For this scheme
Depositor is an individual who on behalf of a minor girl child of whom he or
she is the guardian and deposits amount in account opened under this scheme.
Who can be ‘Guardian’ under this Scheme – In relation
to a minor girl Child Guardian means
(i) either father or mother; and
(ii) where neither parent is alive or is 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.
One Girl One Account- Depositor cannot open
multiple or more than one account in the name of a Girl Child.
Can be opened for Maximum two girls – Natural or legal
guardian of a girl child allowed to open one account each for two
girl children’s.
Account opening for third Girl – Under this scheme
natural or legal guardian of the girl child shall be allowed to open third
account in the event of birth of twin girls as second birth or if the first
birth itself results into three girl children, on production of a certificate
to this effect from the competent medical authorities where the birth of such
twin or triple girl children takes place.
Age Restriction for Opening of Account- The account may be
opened by the natural or legal guardian in the name of a girl child from the
birth of the girl child till she attains the age of ten years and any girl
child, who had attained the age of ten years, one year prior to the
commencement of these rules shall also be eligible for opening of account under
these rules. Scheme is been commenced from 02.12.2014.
Image courtesy of David
Castillo Dominici at FreeDigitalPhotos.net
Documents to Open the Account- Birth certificate of a
girl child in whose name the account is opened shall be submitted by the
guardian at the time of opening of the account in post office or bank along
with other documents relating to identity and residence proof of the depositor.
No Fixed Interest Rate- Under this scheme
Interest rate is not fixed and Government will declare on yearly basis the
Interest on accounts opened under these rules. For the Financial Year 2014-15
Govt. has declared Interest Rate of 9.10% vide Notification F.NO. 2/3/2014.NS-II, DATED 20-1-2015.
Interest Compounding Monthly/ Yearly
Interest will be compounded yearly and will be credited to
account till the account completes fourteen years from the date of
opening.
In case of account holder opting for monthly interest, the
same shall be calculated on the balance in the account on completed thousands,
in the balance which shall be paid to the account holder and the remaining
amount in fraction of thousand will continue to earn interest at the prevailing
rate.
Where one can open account?- At any post
office in India doing savings bank work and Branch of a commercial bank
authorised by the Central Government to open an account under ‘Sukanya
Samriddhi Account Rules, 2014’.
Maximum and Minimum Deposit- The account may be
opened with an initial deposit of one thousand rupees and thereafter any amount
in multiple of one hundred rupees may be deposited subject to the condition
that a minimum of one thousand rupees shall be deposited in a financial year
but the total money deposited in an account on a single occasion or on multiple
occasions shall not exceed one lakh fifty thousand rupees in a financial year.
Term Period – Deposits can be made till
completion of fourteen years from the date of opening of the account. The
maturity of the account is 21 years from the date of opening of account or if
the girl gets married before completion of such 21 years.
Regularisation of irregular account – Where minimum amount
of Rs. 1000/- a year has not been deposited than such irregular account may be
regularised on payment of a penalty of fifty rupees per year along with the
minimum subscription of Rs. 1000/- for the year (s) of default any time till
the account completes fourteen years.
Mode of Deposit – Deposit can be made in
cash; or by cheque or demand draft. Where deposit is made by cheque or
demand draft, the date of encashment of the cheque or demand draft shall be the
date of credit to the account.
Who can Operation the account?
(1) 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.
(2) On attaining age of ten years, the account holder that is
the girl child may herself operate the account. however, deposit in the account
may be made by the guardian or any other person or authority.
Premature closure of account –
(1) In the event of death of the account holder. the account
shall be closed immediately on production of death certificate issued by the
competent authority and the balance at the credit of the account shall be paid
along with interest till the month preceding the month of premature closure of
the account , to the guardian of the account holder.
(2) Where the Central Government is satisfied
that operation or continuation of the account is causing undue hardship to the
account holder, it may, by order for reasons to be recorded in writing, allow
pre-mature closure of the account only in cases of extreme compassionate
grounds such as medical support in life‑ threatening diseases, death, etc.
Pass book
(1) 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.
(2) The pass book shall be presented to the post office or
bank. as the case may be, at the time of depositing money in the account and
receiving payment of interest and also at the time of final closure of the
account on maturity.
Transfer of account to other place – The account may be
transferred anywhere in India if the girl child in whose name the account
stands shifts to a place other than the city or locality where the account
stands.
Pre-Mature Withdrawal- To meet the financial
requirements of the account holder for the purpose of higher education and
marriage withdrawal up to fifty per cent of the balance at the credit, at
the end of preceding financial year shall be allowed but such withdrawal shall
be allowed only when the account holder girl child attains the age of eighteen
years.
Closure on maturity or before maturity due to Marriage of
Account Holder- The account shall mature on completion of twenty-one years
from the date of opening of the account but in case marriage of the account
holder takes place before completion of such period of twenty-one years the
operation of the account shall not be permitted beyond the date of her
marriage. In such closure of accounts accountholder 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 account.
Payment of Interest and Principal on Maturity- On maturity or pre
maturity withdrawal due to marriage of girl child, the balance including
interest outstanding in the account will be paid to the account holder on
production of withdrawal slip along with the pass book.
Tax Benefit – The amount
deposited towards Sukanya Samriddhi Account is deductible under
section 80C of Income tax Act,1961 upto Rs.1.5 lakhs as notified by Notification No. 09/2015 dated 21.01.2015. Amount
deposited in this account will be counted in overall limit of Rs. 1.50 Lakh
under section 80C. Interest earned in this scheme is taxable, but maturity
amount is exempt.
Comparison with PPF in respect of Tax Benefit- under PPF Scheme
interest earned is tax free but interest earned on Sukanya Samriddhi Account
deposit is taxable. Investment in Both PPF & Sukanya Samriddhi Account is
eligible for deduction under section 80C of the Income Tax Act, 1961.
Drawback of the Sukanya Samriddhi Account Scheme-
- High Lock in Period
- Limitation on No. of Account
- Tax on Interest Income
- Scheme do not provide for online transfer of Amount in this account. It allows only payment by Cash, Cheque and Demand Draft.
- No Clarity on Future Interest Rate for this account.
- No Clarity on Taxability of Maturity Amount.
Conclusion - It’s a good scheme
started with a good purpose by the Government but again a halfhearted effort as
government should have exempt Interest earned on this scheme or should have
provided separate deduction for amount deposited in this scheme instead of
including it in Overall Deduction Limit of Section 80C of the Income Tax Act,
1961.
SOURCE: www.taxguru.com
