Budget 2015 has made the newly launched “Sukanya Samriddhi Yojana” fully tax-free. This means Sukanya Samriddhi Yojana is now tagged as EEE (Exempt, Exempt, Exempt) Investment Avenue under section 80C just like Public Provident Fund.
Details of tax-benefits of Sukanya Samriddhi Yojana under Budget 2015-16
Exemption on Contribution
The contribution/payment made towards Sukanya Samriddhi Account will be an eligible deception u/s 80C up to the threshold limit of Rs.1.50 lakhs (no changes in Budget 2015-16).
Exemption on Interest Income
The interest earned on the deposited amount will again be tax-free. Thus no need to add the interest income earned in the income of the guardian.
Exemption on Maturity Amount
Both the maturity amount receivable at the end of the 21 years and 50% withdrawable amount at the completion of 18 years of girl child for her marriage or higher education will be tax-free.
Prior to Budget 2015, Sukanay Samriddhi was ETE (Exempt, Taxable, Exempt) scheme, which means the contribution was deductible u/s 80C and the maturity amount was tax-free but the interest earned on yearly basis was taxable in the hands of the guardian, which is now been also made tax-free. So now SSA is fully comparable to PPF and scores above the PPF in terms of earnings i.e. interest rate is higher in SSA from PPF.
What to do now?
Sukanya Samriddhi Account is for the people who cannot accumulate enough money for their girl child’s education and marriage. Thus by investing small amount of Rs.1000 per month, the magic of compounding gives them a considerable sum to fund their girl child’s higher education and marriage. Though the accumulated amount will not be huge but people who are risk averse and cannot afford to invest in equity market are good to go with Sukanya Samriddhi Yojana.