Tax Benefits of Sukanya Samriddhi Account (80C)
Tax Benefits of Sukanya Samriddhi Account Yojana. In today’s world women are breaking barriers and gender stereotypes every single day. After years of being repressed and controlled, women are now becoming more and more self reliant and in all the fields that they enter they are going toe to toe with the best of the best and more often than not coming out on top. The women all over the world have breached the glass ceiling and have moved from the kitchen to the boardrooms of the biggest companies in the world. The transition has been seamless and completely on the basis of the strength, talent and courage of women everywhere.
A similar renaissance has occurred in India too, but the change has largely been restricted to the urban areas. In some parts of the country, feudalism is rampant and a patriarchal society holds sway. In these places the plight of women and girls has remained unchanged right from the pre independence era, it’s as if time forgot to pass in those places. In such places women are denied their basic human rights, they are denied education and are only seen fit for household work. Such a mindset does not, only harm and affect the lot of women in general, it is also detrimental to the growth of the entire nation.
Repressing women causes untold losses to our economy because of the talent and potential which could otherwise have changed the face of the country being stifled and wasting away in the hinterlands of the country. Recognizing the situation as dire our Prime Minister has come up with the Sukanya Samriddhi Yojana which aims at allowing a girl to determine her destiny and take the reins of her life in her own hands. The scheme empowers the girl child to take decisions on her studies or marriage independently, but it also provides incentives to the parents or guardians of a girl child to invest in such accounts, and though the amount in these accounts solely belongs to the girl child, the incentives are lucrative enough to induce even the more sceptical of parents to invest in this scheme.
These incentives are mainly in the form of tax breaks and tax deductions, which ensure that the deposits made by the parents or guardians don’t seem burdensome.
Tax Benefits under Sukanya Samriddhi Account Yojana are:
To induce people into adopting this scheme for their daughters the benefits that the Government is providing are:
- Section 80C under the Income Tax act 1961, allows taxable income to be reduced by the amount spent for certain specific purposes. With the reduction in taxable income, the tax payable also reduces thereby helping the assesse save money. The amount deposited in the accounts under the Sukanya Samriddhi Yojana are eligible for deduction under section 80C. However it should be kept in mind that the maximum amount that can be allowed as deduction under 80C is Rs.150000.
- The accounts opened under the Sukanya Samriddhi Scheme attract an interest rate which is significantly higher than normal savings bank accounts, often almost twice the rates offered by some banks on their saving banks accounts. Thus even if the funds remain locked up for a certain period of years, with interest being compounded annually at such a high rate the returns on the money so deposited is much higher than what you would get if you let that amount languish in an ordinary savings bank account. Moreover, the largesse doesn’t stop there, the interest so earned over the tenure of the account is completely tax free.
- The amount deposited in the Sukanya Samriddhi Account can only be withdrawn, that too after maturity by the girl child in whose name the account has been opened in the first place. This minimizes the chances of misuse of the funds by people other than the account holder herself and it comes with the added benefit of being tax free. Thus irrespective of the amount being withdrawn from the account the girl child is not required to pay any tax on that money. Providing tax benefits to both the beneficiary and the depositor is a masterstroke, and helps encourage support for this scheme from both the quarters.
Points to note:
As per the Sukanya Samriddhi scheme each account opened under this scheme can have only one depositor. Thus both parents or multiple guardians chipping in is not allowed. Similarly the tax benefits that are available under this scheme is only available to the person who is the depositor of the account and to no one else, this benefit is also non transferable. Thus either of the parents or a guardian, who is the sole contributor to the account can avail the deductions under section 80C.
People should understand the motive behind the Sukanya Samriddhi Yojana and they should come out in support of their daughters and in support of this scheme. For too long have women been shackled and oppressed, now the time has come to let the girl child fly, because given the chance she will soar above all.
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