80C Exemptions in Sukanya Samriddhi Account

Fate of girl child in India has always been a concern with reports of feticide from across the country.  Most of the rural households in India do not want a girl child to take birth in their family just because they are considered to be a financial burden.  There is a lot of money involved while getting a girl married and it weighs heavy on the pockets of the parents and guardians.

To cater to this concern, central government has launched a girl child prosperity scheme with the formal name of Sukanya Samriddhi Yojana, under which parents can save money for their girl child’s marriage and higher education.

Complete Tax Exemption under Section 80C of Income Tax

Along with the financial security of the girl child, what is more appealing with this scheme is that it enjoys EEE tax exemption under Section 80C of Income Tax.  This means that the following aspects of investment would be completely free from income tax:

  • The Final Proceed Amount
  • Interest accrued on the Contributions
  • The investment that you do within a fiscal year

How to avail 80C tax benefits under Sukanya Samriddhi Yojana?

To better understand how it works, let’s take an example here.  You contributed around 1.2 lakh to your daughter’s Sukanya Samriddhi Account during a given fiscal year.  By the end of the year when you would be filing your income tax returns, you can mention this contribution and this amount would get deducted from your income for tax under section 80C.

Highest Rate of Interest

Sukanya Samriddhi Account offers excellent rate of interest too.  The rate of interest would be decided from time to time by the central government, which is currently at 8.6% for 1st Quarter of FY 2016-17. Please follow this link for current interest rate offered under Sukanya Samriddhi Scheme.

A Scheme with multiple benefits

We often come across people who are looking for investment schemes every year in order to save taxes.  One of the most common and easiest methods people resort to is buying NSCs from nearest post office and claiming them for tax exemption.  Alternatively, you can do a number of other investments to save taxes.

However, there are not many tax saving instruments that would cater to specific purpose along with tax saving.  Sukanya Samriddhi Yojana will cater to three of your core concerns:

  1. It will take care of the financial security of your girl child
  2. It will work as a tax saving instrument
  3. It offers the best rate of interest as compared to other small saving schemes

The maximum limit of tax saving in Sukanya Samriddhi Yojana

As per the scheme, the parent or legal guardian of a girl child can contribute any amount between Rs 1000 to Rs 1.5 lakh per annum.  Moreover, there is no minimum or maximum number of times you need to deposit in Sukanya Samriddhi Account.

Hence, the maximum tax exemption that you can avail from Sukanya Samriddhi Account investment is Rs 1.5 lakh.

Who can avail tax exemption under 80C against SSA contributions?

A contributor to Sukanya Samriddhi Account for the girl child can be anyone among the following:

  • Any of the parents of the girl child
  • Any legal guardian, in case of parents not able to contribute or parents not alive anymore

Only one person contributing to Sukanya Samriddhi Account can claim tax exemptions under the scheme.  That means either of the parents or legal guardian can claim tax benefits against Sukanya Samriddhi Account contributions.

Last but not the least; Sukanya Samriddhi Yojana is an excellent mode of tax saving along with a tool for securing the future of your girl child. To open a Sukanya Samriddhi Account for your daughter, you can walk up to any of the authorized banks or post offices and meet the concerned official.

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