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New Rules On Sukanya Samriddhi Scheme Are Notified

Sukanya Samriddhi Scheme, launched in December 2014, offers
- assured returns
- high competitive returns
- tax-free returns

Therefore, for Indian investors (who simply love 'guarantee' and 'tax exemption') this is a great product, just like the PPF.

In fact, it is such a brilliant investment that it can easily dethrone another product which is very dear to the Indians i.e. insurance. This is proven by the fact that, within such a short time, more than 75 lakh accounts have been opened and almost around Rs.3000 crores invested in the scheme.

The only drawback with Sukanya Samriddhi Yojana is that only your daughter(s) are eligible for it. You can't invest in this scheme for your son(s).

The salient features of the scheme were already covered in my earlier blog post Sukanya Samriddhi Scheme spells trouble for insurance.

Recently, the Govt. has notified certain amendments to scheme under the Sukanya Samriddhi Account Rules, 2016.

Important changes announced are discussed below.

One. You can now open a Sukanya Samriddhi account even for your 'adopted' daughter. Earlier, only the parent or the legal guardian could open such an account. The clarity was missing as to whether the adopted daughter was also eligible or not.

Two. To be eligible under the scheme, the girl child has to be a resident Indian right from the time of opening the account and till its maturity (or closure).

If she becomes a non-resident in the interim, the account would be closed prematurely and no interest shall be payable from the date of the status change.

Three. Deposits can now be made into the account for 15 years (earlier 14 years) from the date of opening the account.

Four. Maximum investment in a year cannot exceed Rs.1.50 lakhs. Any excess amount, mistakenly invested, will not earn any interest and can be withdrawn at any time.

Five. Minimum amount is fixed at Rs.1000 per year. Failure to make the minimum deposit, would result in the account being classified as in default. A penalty of Rs.50, for each year of default, would be levied to regularize the account.

If the account remains in default for 15 years, then the whole account (including the amount deposited before default) shall be paid only the Post Office Savings Account interest rate of 4% p.a.

Six. The interest, which was earlier revised and applicable on an annual basis, will now be reset every quarter. This is true of all post office schemes (Read : Small Saving Schemes Interest Rates To Turn Volatile). Interest for the quarter Apr-Jun 2016 is 8.60% p.a.

By the way, do you why Small Savings Schemes Rate Cut is Fantastic News?

Seven. The interest would be calculated every month, on the minimum account balance between 10th and the end of the month. Hence, the amount deposited after the 10th will not earn any interest for that month.

Forget Insurance. Think Sukanya Samridhhi Yojana for your daughter.

Eight. Earlier, 50% of the amount outstanding as at the end of previous year could be withdrawn for education purposes, provided the girl had attained 18 years of age. Henceforth,
- the withdrawal amount would be 50% or lower, based on the actual fees payable
- the girl child should have completed 18 years of age or passed 10th std., whichever is earlier
- the amount can be withdrawn as lump sum or in 5 annual instalments.

Nine. As regards withdrawal / closure of account upon marriage specified earlier, henceforth
- the account can be continued for 21 years if desired and need not be compulsorily closed after marriage
- the amount can be withdrawn even before marriage, one month prior to the date of marriage. Further, if required the amount has to be withdrawn within three months after the marriage.
- as against an affidavit stating that she is not below 18 years of age, the girl can now even submit an age proof.

Ten. In addition to cash or cheque / DD, you can now invest via electronic transfer too, provided your post office or bank offers such a facility.

Eleven. Duplicate passbook can be obtained, in case the original is lost or mutilated, on payment of Rs.50.

Twelve. Upon maturity after 21 years, no further interest shall accrue to the account. Earlier, such accounts were paid interest even after maturity, till the account was actually closed.

Thirteen. Earlier, premature closure of account was permitted under exceptional circumstances only, such as death or for medical support in life-threatening diseases or similar such extreme compassionate grounds. This will now be allowed only after the first 5 years from the date of opening the account.

Henceforth, the account can also be closed for any other reason and at any time as desired. However, the interest payable in such cases would be equal to the Post Office Savings Account interest rate only.

Fourteen. The account can now be transferred from / to post office, from / to bank and between post office and bank, free of cost on submission of proof of change in residence. Even otherwise the account can now be transferred, but on payment of a fee of Rs.100.

These, in a nutshell, are the new rules notified by the Govt. on the Sukanya Samriddhi Yojana.

Given that it is a far superior product to insurance, you must never make the mistake of buying an insurance policy for your daughter. Instead, open a Sukanya Samriddhi Account... today.

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