The last date to file our Income Tax Return has been extended till the 31st of August this year. Paying taxes is a duty of every citizen of this country. A part of our hard earned income is returned to the Income Tax Department of India. However, we all desire to save up the most of the money we earn for personal needs or any future emergencies. There are many smart ways to do that. Some do it by investing in mutual funds and other schemes available in the market, while many of us try and invest in real estate properties and the like. This article will talk about one such investment scheme which will let you save on your tax returns as well as secure a good future for your loved ones. This is a government initiative known as the Sukanya Samriddhi Yojana scheme.
This money investing plan is meant to secure the future of any girl child. It was introduced in 2015 by the Union Government led by Prime Minister Narendra Modi. This is a small savings scheme that is a part of the Beti Bachao Beti Padhao Movement initiated by the government. This is supposed to bring women to the forefront of the social and economic progress of the country. We also know that female foeticide is a practice in our country. This pradhan mantri sukanya samriddhi yojana aims to control, and eventually eradicate such practices. The idea of this plan is to invest Rs 1.5 lakh every year for fifteen straight years. At the end of it, your daughter, or the recipient, will receive a lump sum of Rs 70 lakh once she turns 21 years old. However, the beneficiary listed should be less than ten years old when you start investing in the Sukanya Samriddhi Yojana.
There are three main tax benefits of investing in sukanya samriddhi yojana scheme:
- Firstly, no tax will be applicable on the amount of money you invest
- Neither will any tax be levied on the interests you earn or the money you withdraw in the end
- Based on your income slab, you can invest anything starting from Rs 250 a year to Rs 1.5 lakh every year. You can calculate and adjust your tax slabs and requirements accordingly.
The money will be handed over only to the girl child once she turns 21. This will not only help her to have her own sense of independence, but also help her to plan her life from there onwards and move towards higher education or help to fund her own marriage and other needs. However, part of the money can be withdrawn once your daughter turns eighteen, based on education needs. The rest can be withdrawn in the financial year succeeding that year. The best part of sukanya dhan yojana is that it offers complete tax benefit on the savings amount you deposit every year. This is a tax exemption offered by the government to encourage parents of girl children to save for their daughter’s secure future. Like other tax saving schemes and provident funds available, the Sukanya Samriddhi Yojana is also applicable to tax exemption under Section 80C of the Income Tax Act. As specified above, the interests earned from this will also be exempted from tax. You end up getting the best of both worlds, firstly, saving up due to the lucrative tax benefits and securing your daughter’s future.
There are just a few guidelines which one has to follow. Firstly, the sukanya samriddhi account can be opened by either a parent or a legal guardian. As specified above, the account holder must be below ten years old when the account is made. One can only hold one of such accounts in this plan. Having more than one account is not allowed. You can open up more than one account on behalf of your other girl child, but not more than that. You can also keep on depositing for a period of up to fifteen years from the date you open the respective accounts. As you can understand, this is a very good way to invest your hard earned money and save taxes at the same time. The best part of this plan is the secure life you help your child build for herself. She can use this money to further her higher education or any other personal need, including marriage.
Now, let us try and understand the investment and interest rates for the Sukanya Samriddhi Yojana. At present, the rate of interest is calculated at 9.1% per annum. This is actually the highest rate of interest offered by any of the government-sponsored schemes that encourage investing in small savings methods. This rate changes every year. We would advise you to check up the current rate before investing. If you deposit Rs 20,000 per year, you can expect an estimated lump sum return of around Rs 94,000, or possibly more, at the end.
Most public sector or nationalized banks are at your service to help you open the account from there. You might even opt for other mutual funds or liquid investments that are available in the market. However, considering this sukanya samriddhi Yojana might be the better choice for you. Why? Firstly, the high rate of interest sets the bench. More than that, this is a government initiative where no risks are involved unlike mutual funds which have varying risk levels attached to them. Everything is very easy to process. In fact, most nationalized banks have the facility to help you open an account for your daughter if you wish to deposit in this small savings scheme. Thirdly, and most importantly, you get to save a lot on taxes because of the tax exemptions mentioned in the Income Tax Act. So go ahead and consider investing in the Sukanya Samriddhi Yojana!