Sukanya Samriddhi Yojana offers 8.2% rate in March quarter; will you get this interest for entire SSY tenure? For January 2024-March 2024 quarter the interest on SSY is 8.2%. Read here to know how the interest on SSY is calculated
Sukanya Samriddhi Yojana (SSY) is a tax-free small savings scheme for the girl child. The parents of girls aged 10 or below can open an SSY account in the name of the girl child. Sukanya Samriddhi Yojana offers an attractive interest rate of 8.2% for the January-March quarter.You have to deposit money in the SSY account for 15 years from the date of account opening. Sukanya Samriddhi Yojana account will mature 21 years after the date of opening or at the time of marriage of the girl child (after attaining the age of 18 years). So, if you invest in SSY now, will you get a high interest rate of 8.2% for the entire tenure? Read here to find out.
Also read: FD interest of up to 7.9%: Want higher rate on your tax-saving FD? Book it right now.
How is interest on Sukanya Samriddhi Yojana (SSY) calculated?
First, let us understand how the interest rate of Sukanya Samriddhi Yojana is calculated. The central government revises the rates of small savings schemes every quarter.
The interest rate of Sukanya Samriddhi Yojana (SSY) is not fixed for the entire tenure of the investment. It fetches the interest rate that the central government announces each quarter. So, if the central government increases the interest rate of SSY for a quarter, you will get the increased rate on your investment for the said quarter. If the central government decreases the interest rate of SSY for any quarter, your SSY investment will get a lower interest rate for that particular quarter.
So if you invest in SSY at an 8.2% interest rate during the January-March quarter, it will not be fixed for the entire tenure of the investment.
"This approach ensures that the interest earned itself generates further interest, enhancing the scheme's yield over time. The government revises the rate quarterly, reflecting changes in the economic landscape. This flexibility allows the scheme to adapt to the prevailing financial environment, ensuring its alignment with the government's economic objectives," says Adhil Shetty, CEO, BankBazaar.com.
The interest on the SSY is calculated on a monthly basis. The balance as of the 5th of the month is used to calculate the interest for the month. "If a withdrawal is made after the 5th, that amount is reduced while calculating the balance. The total interest earned is then added to the balance at the end of the year," says Ankit Jain, partner, Ved Jain and Associates, a CA firm.
Interest on Sukanya Samriddhi Yojana is compounded annually and is credited to the account at the end of each financial year.
Also read: POTD, Sukanya Samriddhi Yojana interest rates hiked.
Taxation rule: Sukanya Samriddhi Yojana
Tax deduction under Section 80C is available for investments made in SSY, provided the individual has chosen the old tax regime. "Further, the interest earned on the deposits is also completely tax-free making it a very attractive investment option. The amount received at the time of maturity is also tax-exempt," says Jain.How to get a higher interest in SSY?
Since the interest rate is compounded annually and is credited at the end of each financial year, experts say that the investment in SSY must be fully made at the start of each financial year. "Investors should deposit the maximum allowed amount of Rs 1.5 lakh at the start of each financial year. Early deposits benefit from compounding interest throughout the year, which should significantly enhance the total returns for a year compared to returns from monthly contributions," says Shetty.This story originally appeared on: India Times - Author:Faqs of Insurances
