International Girl Child Day 2023: How Sukanya Samriddhi account can be used to fund higher studies of your girl child

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Sukanya Samriddhi account is a popular savings instrument in India for parents with daughters as it offers government-guaranteed, tax-free returns. It's a savings strategy designed specifically for Indian female youngsters. Deposits can be made on a monthly or yearly basis.

Sukanya Samriddhi Yojana (SSY) currently offers an interest rate of 8 per cent. However, this SSY interest rate is changeable on a quarterly basis. If parents start investing in the SSY account immediately after the birth of their girl child, they would be able to contribute for 15 years as one can deposit in the SSY account till the girl child attains 14 years of age.

SSY allows partial withdrawal for marriage or higher education once the holder turns 18, but the withdrawal is limited to 50% of the amount in the account at the end of the preceding financial year. Personal Finance Experts say that SSY is ideal for parents saving for their daughters’ education, since the investment horizon aligns with the child graduating and pursuing higher education. But if you buy it when your daughter is above 4-5 years old, SSY may not serve the goal of funding higher studies of your girl child.

If a person invests 1.5 lakh annually or ₹12,500 per month in 12 instalments in an SSY account for fifteen years. Assuming an 8% interest rate, if the investor decides to opt for full withdrawal at the time of maturity when the girl becomes 21 years old, then the SSY maturity amount will be around ₹63,79,634, as per Groww Sukanya Samriddhi Yojana calculator. Deposits made in SSY qualify for income tax deduction for up to ₹ 1.5 lakh under Section 80C of the Income Tax Act.