KKN Gurugram Desk | As parents, ensuring a secure financial future for your daughter is often a top priority. For those looking to build a reliable corpus for their child’s education and marriage, Sukanya Samriddhi Yojana (SSA) stands out as an attractive investment option. On its 10th anniversary, this government-backed small savings scheme remains a cornerstone for many families due to its assured high returns, tax benefits, and long-term growth potential.

What is Sukanya Samriddhi Yojana?

Launched by the Government of India in 2015 as part of the “Beti Bachao, Beti Padhao” initiative, Sukanya Samriddhi Yojana is designed exclusively for the financial security of young girls. It offers a robust, tax-efficient way to save for their future, making it particularly appealing to risk-averse investors. For the January-March 2025 quarter, the scheme offers an attractive interest rate of 8.2%, one of the highest among small savings instruments.

Key Features of Sukanya Samriddhi Account

1. Eligibility and Operation:
   • Parents or legal guardians can open an SSA for a girl child below 10 years of age.
   • A family can open accounts for up to two daughters, with exceptions made for twins or triplets.
   • The account remains operational until the girl turns 21, with parents managing it until she reaches 18.
2. Deposit Limits:
   • Minimum deposit: ₹250 per financial year.
   • Maximum deposit: ₹1.5 lakh annually.
   • Deposits are allowed for the first 15 years after account opening, with interest accruing until maturity.
3. Maturity Rules:
   • The account matures after 21 years or upon the girl’s marriage post the age of 18.
   • Withdrawals are allowed for education or marriage purposes, subject to specific rules.
4. Tax Benefits:
   • Sukanya Samriddhi enjoys E-E-E (Exempt-Exempt-Exempt) status under the Income Tax Act:
     • Contributions qualify for a deduction under Section 80C.
     • Interest earned and maturity proceeds are tax-free.

Advantages of Sukanya Samriddhi Yojana

1. High Returns: SSA offers a lucrative interest rate compared to other small savings schemes. This ensures steady growth of your investment over the long term.
2. Tax Efficiency: With its tax-free status, every rupee invested directly contributes to your daughter’s financial security without the burden of taxation.
3. Emotional and Practical Appeal: For many parents, investing in SSA aligns with their desire to create a dedicated fund for their daughter’s education or wedding, making it more than just a financial decision.
4. Encourages Discipline: The long lock-in period ensures that funds are preserved for their intended purpose, safeguarding against impulsive withdrawals.

Limitations of Sukanya Samriddhi Yojana

1. Liquidity Constraints: While partial withdrawals are permitted once the girl turns 18 or completes her 10th grade, the locked-in nature of the scheme can limit flexibility. The maximum allowable withdrawal—50% of the account balance from the preceding year—may not be sufficient for higher education expenses.
2. Investment Ceiling: The annual cap of ₹1.5 lakh, unchanged since the scheme’s inception, may not be adequate given the rising costs of education. Adjusting this limit in line with inflation could make the scheme more effective.
3. Limited Returns Compared to Equities: Although SSA offers stable returns, it falls short when compared to equity mutual funds, which have the potential to deliver inflation-beating growth over 10–15 years. For families with a higher risk appetite, equities can be a complementary option to SSA for building a larger education corpus.

How to Maximize the Potential of SSA in Your Portfolio

Financial advisors suggest using Sukanya Samriddhi as the debt component in your investment strategy while incorporating equity-based instruments for growth. The long lock-in period, viewed by some as a drawback, can actually work in your favor by ensuring funds are dedicated solely to your daughter’s future.

“Sukanya Samriddhi adds stability to your portfolio while safeguarding against impulsive spending. For risk-averse investors, it’s a vital tool for creating a secure financial foundation,” says Amol Joshi, founder of Plan Rupee Investment Services.

Recommendations for Enhancing SSA’s Effectiveness

1. Lowering Withdrawal Age: Allowing complete withdrawals at multiple age milestones—such as 16, 18, and 21—could make the scheme more flexible for families facing rising education costs.
2. Increasing Annual Limits: Revising the annual deposit ceiling to reflect inflation or introducing periodic adjustments could enable families to accumulate a more substantial corpus.
3. Simplifying Rules: Easing restrictions on premature closure and withdrawals for emergencies could make SSA a more attractive option for modern families.

The Verdict

Sukanya Samriddhi Yojana remains a compelling option for parents looking to build a dedicated fund for their daughter’s education and marriage. While it offers guaranteed returns and unmatched tax benefits, its limitations in liquidity and investment caps mean it works best when combined with other growth-oriented instruments like equity mutual funds.

By using SSA strategically, parents can achieve both security and growth, ensuring that their daughters have the financial support they need for a bright future. Whether you’re a first-time investor or looking to diversify your portfolio, Sukanya Samriddhi Yojana is a must-consider tool for creating long-term wealth.