What are the tax benefits of investing in Sukanya Samriddhi Yojana?

Investments into Sukanya Samriddhi Scheme are eligible for tax deductions under section 80C. Under the scheme, if you have a girl child below ten years of age, you can put aside some money in the form of a financial gift. The investment would earn similar interest as the PPF, and the wealth created would exclusively help your daughter achieve her financial goals.

Along with EPF, PPF and ELSS, your long-term investments under Sukanya Samriddhi Yojana are eligible for EEE (Exemption, Exemption, Exemption) tax deduction status. As a result, your contribution into the scheme, any interest earned on the investments and the maturity amount, are all safe from taxation. To better understand how the scheme works, let us consider an example. You contributed Rs 1.2 lakh into your daughter’s Sukanya Samriddhi Account during a given financial year.

At the end of the year, you can mention this contribution while filing your tax returns and the amount would get subtracted from your taxable income under section 80C.

Along with tax benefits, Sukanya Samriddhi Account also offers an interest rate of interest 8.5 % (for FY 2018-19). This rate of interest is subject to revision every year. Overall, Sukanya Samriddhi Yojana helps address the following three core concerns:

  • The financial security of your girl child
  • Comprehensive tax savings
  • The higher rate of interest than other similar saving schemes

Being the parent or legal guardian, you can contribute any amount between Rs 250 to Rs 1.5 lakh in a given fiscal year (with effect from July 6, 2018). Moreover, you can open accounts for a maximum of two female children in one family, and there is no limitation on the number of times you need to deposit in the scheme account.

However, contributions can be made from the date of opening the account until the completion of 15 years. Also, only one person making contributions to a Sukanya Samriddhi Account may claim tax exemptions under the scheme. It means that either of the parents or legal guardian may avail tax benefits against Sukanya Samriddhi Account contributions.

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