Sukanya Samriddhi Yojana: Ignoring this key aspect could reduce the final corpus

Sukanya Samriddhi Yojana is designed to secure a girl's child's future as it focuses on wealth generation for the account holder's future education and other major expenses. Many people invest in such schemes after accounting for their monthly expenses and setting aside the remaining funds.

However they may be unaware that the timing of contributions to an SSY account can directly affect the returns they earn, making it important to follow the scheme's deposit rules to maximise the maturity corpus.

Under the scheme's interest calculation rules, deposits made after the 5th day of a month do not earn interest for that month. As a result if you keep missing this deadline over the long term, it can reduce the final maturity corpus that your daughter will receive for her financial needs.

What is SSY? Features and rules explained

It is a savings scheme which comes with sovereign guarantee. SSY scheme is available for girls aged below 10 years and the it offers an attractive interest rate of 8.2% per annum. Parents or legal guardians can start investing from a minimum of ₹250 up to a maximum of ₹1.5 lakh per year.

The scheme also enjoys EEE (Exempt-Exempt-Exempt) tax status, meaning the depositor can claim a tax deduction under Section 80C for the amount invested, along with tax-free interest and maturity proceeds under the Income Tax Act.

A SSY account officially matures 21 years from the date of account opening, however it can be closed prematurely if the girl child marries after turning 18 (up to one month before the wedding or within three months post-wedding).

Sukanya Samriddhi Yojana offers a high interest rate when compared to other investment options such as fixed deposits and provident funds. With its long tenure and guaranteed returns, it is one of the most popular investment options for securing a girl child's future.

How is SSY interest calculated?

SSY accounts currently offer an interest rate of 8.2% per annum, set by the government and revised annually. Although interest is credited on 31 March each year, it is calculated on a monthly basis, making the timing of deposits important for overall returns.

As per the scheme's rules, the interest for the SSY account is calculated on the lowest balance for the calendar month,. The interest earned is further compounded in the scheme till maturity.

Let's say you contribute ₹12,500 every month to an SSY account. If you miss the deposit deadline in a month and the contribution is credited after the 5th, you would lose about ₹85 in interest on that month's deposit at an 8.2% interest rate

Although the amount appears small, regularly missing the deadline can have a noticeable impact on the corpus upon maturity, as the lost interest also forgoes the benefit of long-term compounding.

SSY eligibility and account opening rules

• A SSY account can be opened by a resident parent or legal guardian of a girl child aged below 10 years.
• One family can open and operate a maximum of only two SSY accounts. However, there is an exception for twins or triplets.
• SSY account can also be opened for adopted daughters by their legal guardians.
• NRIs are not allowed to open a SSY account. In case the girl child becomes an NRI, the account must be permanently closed.

Even though the account matures after 21 years, the deposit period of an SSY account is 15 years, post which the corpus continues to benefit from compounding. In case of any default account, a penalty of ₹50 per year and the minimum deposit must be paid to regularise it again. However, no interest will be paid if the amount is not withdrawn even after maturity.