Sukanya Samriddhi Yojana

Sukanya Samriddhi Yojana was launched in January 2015 as part of the Government of India's Beti Bachao Beti Padhao campaign to improve the welfare and financial security of the girl child. The account could be opened by a parent or legal guardian for a girl child below ten years of age, and a maximum of two accounts per family were permitted (three in the case of twin or triplet girls in the second birth). Accounts could be opened at any post office or authorised commercial bank branch.

The interest rate for SSY was set quarterly by the Ministry of Finance and was consistently among the highest offered on government small savings schemes. As of the quarter ending March 2024, the rate stood at 8.2 percent per annum, compounded annually — higher than PPF at 7.1 percent and significantly above fixed deposits at comparable maturities. The higher rate reflected the government's policy intent to incentivise long-term savings for the girl child's education and marriage.

Contributions to SSY had to be made for 15 years from the date of account opening, after which the account continued to earn interest until maturity (21 years from account opening) without requiring further deposits. Partial withdrawals of up to 50 percent of the balance were permitted after the girl turned 18, specifically for higher education expenses, upon furnishing documentary proof of admission. Full premature closure was allowed only in cases of marriage after the girl attained 18 years.

The tax treatment followed an EEE structure: contributions up to Rs 1.5 lakh per year qualified for deduction under Section 80C, all interest earned was tax-free, and the maturity amount was exempt from tax. This made SSY one of the very few EEE instruments available in India, a group that otherwise included PPF and EPF. Given the higher interest rate compared to PPF and the specific purpose of funding a daughter's future, SSY was a compelling allocation for parents of young girls, provided they were comfortable with the lock-in until the child's 21st year.

A practical consideration was the mandatory minimum contribution of Rs 250 per year; failing to contribute in any year turned the account into a defaulted account, which could be regularised by paying a Rs 50 penalty per defaulted year along with the arrear contribution. This feature made SSY suitable for disciplined savers but required awareness of the annual minimum to avoid inadvertent penalties.