Sukanya Samriddhi Scheme New Rules 2016 as per Budget 2016

Sukanya Samriddhi Scheme Yojana is popular saving scheme for the girl child. This scheme is launched by the government under “Beti Bachao Beti Padhao” campaign in 2014. It is one of the highest interest paying scheme. It is estimated that around 20-25 Lac accounts are already opened under this scheme.

Nevertheless, since the beginning, there were some confusions related to Sukanya Scheme, like opening SSA account by NRI, electronic mode of money transfer etc. In order to overcome these confusions and to make this scheme lucrative, the government has notified new rule for Sukanya Samriddhi Scheme. These new rules are called as Sukanya Samriddhi Scheme Rules 2016. These rules are effective from March, 2016. Let’s try to demystify new rules of Sukanya Samriddhi Scheme.

Sukanya Samriddhi Scheme Rules 2016

Old Rule – The account may be opened by the natural or legal guardian in the name of a girl child from the birth of the girl child till she attains the age of ten years. No provision of opening of the account in case of adopted child.

New Rule –  As per new rule Sukanya Samriddhi Account can be opened for the adopted child also.

Minimum Amount Deposit and Default Rules –

Old Rule –  As per earlier rule, deposit in sukanya samriddhi account was allowed till completion of fourteen years from the date of opening of the account.

New Rule – As per new rule deposit can be made in an Account till the completion of fifteen years from the date of opening of such Account.

Old Rule –

• Minimum of one thousand rupees should be deposited in this account every financial year.
• If money is not deposited it can be regularized with a penalty of Rs.50 per year.
• If the account is not regularized or money is not deposited account will be called as defaulted account.
• No provision was made if defaulted account is not regularized till the account completes fourteen years.

New Rule –

• New rule specifies that if defaulted account is not regularized within fifteen years of the opening of the Account, then the whole deposit, including the deposits made prior to the date of default, shall be eligible only for interest rate prescribed for Post Office Savings Bank at the time of its maturity.
• This means defaulted account will earn only 4% interest. The above rule is not applicable if the default occurred because of the death of the guardian of the Account holder.

Maximum Amount Deposit Rule –

Old Rule –

• Maximum deposit allowed under SSA scheme is 1.5 lac for a financial year.

New Rule –

• Maximum deposit limit is kept as it is i.e 1.5 lac. However, provision is made that by any mistake excess of money (more than 1.5 lac) is deposited in the account it can be withdrawn anytime by the depositor.

Mode of Deposit –

Old Rule – The mode of deposit under these scheme as per old rule was

 (1) Cash

(2) Cheque

(3) Demand Draft

New Rule –  As per new rule additional online mode of deposit is introduced. Now one can also transfer money to this account through electronic means (e-transfer) in the concerned post office or Bank. Provided post office or bank has access to the facility of CBS. (Core Banking System). So new mode of deposit is as under –

(1) Cash

(2) Cheque

(3) Demand Draft

(4) Online Fund Transfer

Interest Rate –

Old Rule – Interest rate shall be notified by the government on a yearly basis.

New Rule – The Interest rate on saving scheme like Sukanya Samriddhi shall be notified by the government on a quarterly basis.

• The interest shall be calculated for the calendar month on the lowest balance in an Account on the deposits made between the close of the tenth day and the end of the month.

Premature Closure Rules –

Old Rule –

• The account can be closed immediately in the event of the death of the account holder. It is mandatory to produce death certificate by the competent authority. Entire balance amount along with interest shall be payable to the guardian of the account holder.
• If a deposit of yearly amount in this account is causing hardship to the depositor pre-mature closure is allowed.

New Rule –

• The first rule of premature closure of account remains as it is. However, following additions are made.
• If account holder becomes non-citizen of India or become NRI after opening this account. The accounts deemed to be closed. No interest shall be payable from a change of such status.
• In case any interest was credited to the account after change of status (NRI or citizenship change) same shall be reverted back to the government account.
• Rules for the premature closure in case of undue hardship remains in force.

Transfer of Account –

Old Rule –

• The account may be transferred anywhere in India if the girl child in whose name the account stands shifts to a place other than the city or locality where the account stands.

New Rule –

• The account may be transferred anywhere in India and from the post office to bank or bank to post office.
• One need to submit proof of address change to initiate this transfer free of cost. However, if you want to transfer without submitting address change proof you can do so by making payment of 100 Rs.

Withdrawal Rules –

Old Rule – To meet the financial requirements of the account holder for the purpose of higher education and marriage, withdrawal up to 50% of the balance at the credit, at the end of preceding financial year shall be allowed.

New Rule – The 50% limit for the withdrawal is kept as it is, however following additions are made.

• Such withdrawals are not allowed until account holder attains the age of 18 years or has passed 10^th Standard, whichever is earlier.
• All withdrawal application should be attached with documentary proof. E.g Confirmed offer of admission of the Account holder in an educational institution or a fee receipt from such institution clarifying such financial requirement.
• This amount can be withdrawn lump sum at single go or in an installment, not exceeding one per year, for a maximum of five years.

On April 23, 2016 by www.taxexcel.net

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To start with, let the  explain what exactly has changed in terms of taxation from the year (i.e.AY 2016-17) As per Budget 2015:

1. Tax slabs have not changed
2. investment limit under sec. 80C also same as previous FY 2013-14 up  to Rs. 1,50,000

All changes this budget have been beneficial for the tax payer. If you are already aware of all the provision for saving income tax, you can skip the remaining part and go directly to the income taxcalculator for FY 2015-16 to compute your income tax liability (or TDS) basis your salary or business income. Others, do read on to know all the different tactics you can use to save on income tax.

Income Tax Slabs

Income tax slabs have been changed this year. Standard deduction limit has been raised to Rs. 2,50,000 for both Male and Female assesses.

1) In Case of General Assesses (Both Male & Female):

Income Bracket	Rate
0 to Rs. 2,50,000	0   %
Rs. 2,50,001 to Rs. 5,00,000	10 %
Rs. 5,00,001 to Rs. 10,00,000	20 %
Above Rs. 10,00,000	30 %

2) In Case of Senior Citizens (Age above 60 years but below 80 years):

Income Bracket	Rate
0 to Rs. 3,00,000	0   %
Rs. 3,00,001 to Rs. 5,00,000	10 %
Rs. 5,00,001 to Rs. 10,00,000	20 %
Above Rs. 10,00,000	30 %

3) In Case of Very Senior Citizens (Age 80 years and above):

Income Bracket	Rate
0 to Rs. 5,00,000	0   %
Rs. 5,00,001 to Rs. 10,00,000	20 %
Above Rs. 10,00,000	30 %

* On final tax amount, a surcharge of 3 %
**No surcharge above 10 lacs.

Income Tax Exemptions: 

1) Section 80 C Limit  – Unchanged this year (to Rs. 1,50,000)

• Deduction on premium paid for a life insurance policy, taken after 1 April 2012, will be allowed only if yearly premium is less than 10% of sum assured.  If its more than 10% then it will be not eligible for deduction u/sec. 80C
• ELSS (Mutual Fund)
• PPF (upto Rs. 1,50,000)
• EPF
• FD for 5 years
• Pension Plans
• NSC
• Sukanya Samriddhi Account ( Minor Girl Child Scheme) Max Rs. 1.5 Lakh
• Post Office SB
• Infrastructure Bonds
• Expenditure on Children Education (For upto 2 children only for full time education)
• Tuition fees Maximum allowed is Rs. 1,50,000
• Housing loan principal
• Deferred Annuity
• Approved Super Annotation Fund
• 80CC Raised Up to Rs. 1,50,000 [ Pension Fund ]

2) Section 80CCD - Unchanged this year

Deduction under this section can be claimed only if the contribution to your NPS account is made by your employer and the deduction is limited to a maximum of 10% of your basic salary. Returns on NPS are tax free, but withdrawal is still taxable. The deduction under sec 80CCD is over and above the deduction available under sec 80C.

3) Section 80 D –Changed this year

Deduction under section 80D

• Deduction of Rs. 25000/- is allowed if the same is paid as premium for Medical Insurance taken for self / dependents or towards preventive health check-up (max Rs. 5000). In case any of self / dependents is a senior citizen, the deduction allowed is Rs. 30000/-

4) Section 80DD – Unchanged this year

Deduction under section 80DD

• Exemption given for expenditure made for a disabled dependant towards Medical Treatment/Training/Rehabilitation. It also includes the LIC/Insurance premium paid towards maintenance of such dependant.
• Maximum deduction allowed is Rs. 50,000/- in case of normal disability and Rs. 1 Lakh in case of severe disability.

5) Section 80DDB - Unchanged this year

Deduction under section 80DDB

• Exemption given for expenditure incurred on specified disease or ailments such as cancer/aids.
• Maximum deduction allowed is Rs. 40,000/-. In case of Senior Citizens, maximum deduction allowed is Rs. 60,000/-

List of ailments covered:
(i) Neurological Diseases where the disability level has been certified to be of 40% and above,

1. Dementia ;
2. Dystonia Musculorum Deformans ;
3. Motor Neuron Disease ;
4. Ataxia ;
5. Chorea ;
6. Hemiballismus ;
7. Aphasia ;
8. Parkinsons Disease ;

(ii) Malignant Cancers ;

(iii) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

(iv) Chronic Renal failure ;

(v) Hematological disorders :

1. Hemophilia ;
2. Thalassaemia.

6) Section 80E - Unchanged this year

Deduction under section 80E
Deduction is allowed for repayment of interest component of Higher Education loan. All education after Class 12 is allowed, either vocational or Fulltime. But should be from a school/institute/university recognized by the government.

7) Section 80G - Unchanged this year

• Contribution to exempt charities – 25/50/75/100% depending on the charity and as per approval
• 100% exemption on donation to political parties

8) Section 80U - Changed this year

• Deduction upto Rs. 75,000/- is allowed in case of Permanent Disability.
• In case of Permanent Disability exceeding 80%, maximum deduction allowed is Rs. 1,25,000/-.

9) Section 24B & Section 80EE  - Unchanged this year

• Housing loan interest. Maximum allowed limit raised to – Rs. 2,00,000 (for loans taken after 1 April 1999. For loans before that Maximum Investment Limit was 30,000).
• Additional deduction of Rs. 1 lac will be applicable to persons taking first home loan of up to Rs. 25 lacs for property worth upto Rs. 40 lac. For such persons, the total deduction will be Rs. 2.5 lacs (Rs. 1.5 lac available under section 24(1)(vi) and Rs. 1 lac available under this new section 80EE).
  10) Superannuation - Unchanged this year

Any contribution made by a company to superannuation fund upto Rs. 1,00,000 tax free in the hands of the employee.

11) Conveyance/Transport Allowance - Changed this year

Any Conveyance / Transport Allowance given to an employee is tax free upto Rs. 1600 /- P.M.

12) Medical Allowance - Unchanged this year

Any Medical Allowance given to an employee is tax free upto Rs. 15,000 /- (Supporting Bills required).

13) HRA - Unchanged this year

Any House Rent Allowance given to an employee is tax free upto the minimum value of the following conditions (subject to – when an employee can produce rent paid receipts from landlord for the period and if the employee has not availed of tax exemptions for home loan interest / principal repayment):

1. 50% of Annual Basic (40% of Annual Basic in case of non-metros)
2. Actual HRA received
3. Rent Paid – (10% of Annual Basic)
   Calculate HRA Exemption U/s 10(13A) with Excel utility

14) Professional Tax - Unchanged this year

Any Professional Tax deducted from an employee’s salary can be reduced from the annual salary income to arrive at taxable salary.

15) Provident Fund - Unchanged this year

Provident Fund contributions (under section 80 C and subject to an overall investment limit of Rs. 1,50,000 ) deducted from an employee’s salary are tax exempt.

16)80CCG – Direct Equity Investment - Unchanged this year

Under ‘Rajiv Gandhi Equity Savings Scheme‘ – a new equity investor will be able to claim 50% of his investment in direct equity as deduction subject to maximum investment of Rs. 50,000 and provided his taxable income is below Rs. 10 lacs. The investment will be subject to 3 years lock-in.  
Government has notified this scheme (RGESS). Mutual funds and ETFs that invest in BSE100 or CNX 100 stocks or PSUs which are Navratna, Maharatna and Miniratna will qualify under this scheme. These investments can be traded over stock exchange after 1 year of investment. New equity investor has been defined as someone who has opened a Demat account but has not bought any securities till date of notification of this scheme (22 Sep 2012).

17) Section 80TTA – Savings Bank Interest - Unchanged this year

No tax will be charged on interest earned on balance in savings bank account subject to a maximum of Rs. 10,000 per year.

18) Section 87 A [Tax Rebate Rs.2,000/-  - Unchanged this year

On June 21, 2015 by www.taxexcel.net

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Sukanya Samriddhi Yojana Account is the latest launch in the small deposit scheme segment by Govt. of India. With this launch people started showing huge response and want to know more about this Sukanya Samriddhi Scheme. The scheme has launched with many key features but there is not much clarity over few benefits or clauses. In this article I will try to share those 17 points which will answer almost all possible query regarding this Sukanya Samriddhi Account. This scheme will see a hue success in coming days as this is the major highlight of Beti Bachao Beti padhao campaign

Download Sukanya Samriddhi Account Calculator in Excel

Snapshot of Sukanya Samriddhi Calculator

1.           Girl’s Age limit: Sukanya Samriddhi Account can be opened by a legal guardian or by parents of the girl child by visiting nearest post office or selected bank branches. The girl child age can be maximum 10 years old while opening SSA account. As this is the starting year, Govt is providing a grace period of 1 year till December 2015. Any girl child born between 2 December 2003 and 1 December 2004 can open account up to till 1 December 2015. This rule is just for this year only, it will not continue further. So till 2015 year end girl child age could be accepted even if 11 years, but there after the standard max age to open Sukanya Samriddhi Account is 10 years.

2.          Who can open SSA : Only the parents or the legal guardian of the girl child can open SSA account. One can’t open SSA account for his/her sisters or brothers daughter’s account. In case you want to open this account for your sister in absentee of your father in your family you can open. There could be many such cases which is not at all clear as per Govt. notification.

3.          No of Accounts: The no of account can be opened in the name of max 2 girl child only. If 1st or 2nd birth gave twins then it can be opened for all 3 girls. From a family only one account is possible in the name of girl child. It is not like mother and father can open 2 accounts in the name of a same girl child.

Where to open Sukanya Samriddhi Account : One can easily open this account by visiting nearest post-office where deposit account opening facility is available. You can check out the sample form that you have to fill up in post office. On submit of the form with valid documents you will receive a passbook like our savings account passbook. Besides post office one can open SSY account in banks also. But all banks are not allowed to facilitate this scheme. The List of Bank for Sukanya Samriddhi Account is given below:-

1.     State Bank of India (SBI)

2.     State Bank of Patiala (SBP)

3.     State Bank of Bikaner & Jaipur (SBBJ)

4.     State Bank of Travancore (SBT)

5.     State Bank of Hyderabad (SBH)

6.     State Bank of Mysore (SBM)

7.     Allahabad Bank

8.     Andhra Bank

9.     Axis Bank

10. Bank of Baroda (BoB)

11. Bank of India (BoI)

12. Bank of Maharashtra (BoM)

13. Canara Bank

14. Central Bank of India (CBI)

15. Corporation Bank

16. Dena Bank

17. ICICI Bank

18. IDBI Bank

19. Indian Bank

20. Indian Overseas Bank (IOB)

21. Oriental Bank of Commerce (OBC)

22. Punjab National Bank (PNB)

23. Punjab & Sind Bank (PSB)

24. Syndicate Bank

25. UCO Bank

26. Union Bank of India

27. United Bank of India

28. Vijaya Bank

Also all Post offices in India are authorized to open account under Sukanya Samriddhi Yojana 

4.          Documents require opening SSY account: To open Sukanya Samriddhi Account you have to provide birth certificate of your kid, 2 passport photo graph, photo id of parent or guardian opening the account and address proof. Now for a new born child in many cases name is not updated. In that case I think we can open the account in the name of baby of XXXX like this. Or it is better to wait till the birth certificate is updated with your baby name. If anyone has the answer of this query please share.

5.          Interest rate of SSYAccount: Interest rate of this account will be changing every year. For this year it has fixed to 9.1% which is the maximum for any small deposit scheme. PPF account has 8.7% this year.

6.          Deposit rules: Many people are asking how much I can deposit in Sukanya Samriddhi Account? Can I deposit monthly basis or yearly basis? I will clear this confusion here. The minimum amount one have to deposit to continue this account is Rs 1000 only and maximum 1.5 lakh. Now one can deposit from rs 1000 – 1.5 lakh any amount in any month in a year. There is no such restriction, but don’t forget the min and max limit.

7.          Deposit term : One can deposit under this scheme up to 14 years from the date of account opening only. Means if your child’s age is 5 years now, you can deposit money till 19^th year of her age. After that no further deposit will be allowed.

8.         Maturity: The Sukanya Samriddhi Account will mature after 21 years from the date of opening. E.g. in the previous example the maturity year will be 26^th year of your kid’s age. But there is one more clause regarding marriage. In case your daughter gets married before 26 years, then the account will be closed on that year itself. So, the maturity period of this account will be 21 years or the marriage year which one is earlier. You can download the SSA excel calculator and play with it to get some idea about returns after 18 years or 21 years.

9.          Pre-mature withdrawal: One can withdraw 50% of the amount accumulated till 18^th year of the girl child. The purpose of withdraw here is education expense. So till 18 years whatever amounts accumulate in your Sukanya Samriddhi Account, you can withdraw 50% of that and utilise for your girls education. Rest amount will stay there and earn compound interest till maturity. So before maturity there is only one option provided for a partial withdrawal.

10.      Enjoy interest from 14 – 21 years without deposit: As the deposit period for this account is limited till 14 years, one can enjoy compounding yearly interest on the accumulated money from 14-21 years.

11.       Penalty: In case you forget to deposit the minimum amount of rs 1000 in your Sukanya Samriddhi Account then your account will be discontinued. But nothing to worry, you can pay a penalty of Rs 50 only and again activate the account. The account will continue from where it has stopped operating.

12.      Transfer: The account can be transferred to any part of country with the girl moving that city. But whether it is possible to transfer Sukanya Samriddhi Account from post office to any bank is not at all clear now. Although this is too early to expect as such queries.

13.      SSA is EEE scheme now: After budget 2015, Sukanya Samriddhi Account has been income tax exempted 100%. Earlier while launched first time, the interest earned on this account was taxable. But later on it was decided to make the earning and maturity tax free similar to PPF account. But both parents can’t claim the contribution toward this account under section 80C.

14.      In case of death: In case of death of depositor the account should be closed immediately. Again if the girl child dies unfortunately, then also account has to be closed. In such case the amount accumulated till the previous month of death will be returned to the nominee declared while opening SSA account or the girl child.

15.       Rules for NRI : So far there is no scope for NRIs (Non Resident Indian) to open SSY account. Govt has to clear about this in future notifications.

16.      PPF and SSA combination to make wealth: Can I invest in both PPF and Sukanya Samriddhi Account? The answer is yes. As both the schemes are declared EEE scheme, one can utilize both the savings option to make huge wealth for future, if you are satisfied with the guaranteed return. Although in longer term equity way may be best, but if you don’t like to taste the equity return then these combination would be perfect.

On March 29, 2015 by www.taxexcel.net

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