Can NRIs Take The Benefit Of Sukanya Samridhi Account?
Posted on October 01 2020
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If you have a girl child then you must have heard about the very popular sukanya samridhi account. This scheme was basically launched for the benefit of a girl child. The account has benefits similar to that of a PPF account. Deposits are qualified for the deduction under section 80C and the interest income is completely tax free. The rate of interest is slightly better than a PPF.
Recently, the income tax department has revised the sukanya samridhi account rules in 2014. New sukanya samridhi account rules of 2016 have been announced.
What did not change –
· The sukanya samridhi account continues to enjoy the tax benefits under section 80C.
·Each financial year a maximum of Rs 1,50,000 can be invested.
·Interest income is completely tax free.
·There is no tax charged on the withdrawals.
The following changes have been introduced via Sukanya Samridhi Account Rules of 2016
Sukanya Samridhi Account (SSY account) is NOT allowed for NRI girls – A girl child would be qualify for an SSY account only if she is a Resident Indian Citizen at the time of opening the account and remains so until the maturity or closure of the account. Therefore, Non-Resident Indian (NRI) girl child are not allowed this benefit from the sukanya samridhi account scheme.
The girl child is required to be both a citizen of India as well as a resident in India, in order to be qualified. NRI girl child are not given the benefit from this scheme.
Change in the Residential status after opening the account – At any point of time after opening the SSY account, if the girl child becomes non-resident or non-citizen of India then the guardian should inform the bank within one month from such change. No interest will be paid from the date of changing the citizenship or residential status changes and the account will be considered as closed.
Includes adopted and natural girl child – While the earlier rules were silent in this aspect whereas the new rules have made an adopted girl child qualify for the SSY account.
Maximum period of deposit – As per the new rules, the deposits in the sukanya account can be made till the completion of 15 years from the date of opening of the account. The earlier rules gave a time limit of 14 years.
Default in deposits – Non-payment of minimum deposit of Rs 1,000 will be considered as a default in the account. In case of default, a penalty will be charged of Rs 50, which is required to be paid along with the minimum deposit amount. If such penalty is not paid, then the entire deposit including the deposits made before the date of default will receive interest as if it were a post office savings bank account, any excess interest paid will be reversed. The only exception made to this rule is in case of default is due to death of the guardian.
Medical exigencies & premature closure – In case of life threatening disease of the account holder or the guardian, it can become difficult to continue the deposits to the account. In such a case the bank can allow premature closure on the compassionate grounds. Therefore, the premature closure cannot be made before 5 years from the opening of such account for this particular reason. Premature closure, though, can be made only in the case of a girl child becomes non-resident or non-citizen or in case of default where the interest is paid as per post office savings bank account rates.
Interest calculation – Interest on the deposit to the sukanya samridhi account will be calculated for a calendar month on the lowest balance in the account on the deposits made between the close of the tenth day and the end of the month.
Tax Assist is a professional income tax consultancy in India for both corporate houses and individual tax payers; the latter comprising Salaried Individuals, Seafarers, Professionals and Non Resident Indians.
With the help of Tax Assist and its team of income tax professionals, taxpayers can minimize their Income Tax liability, maximize their net income and create opportunities to save for current and future needs while maintaining proper accounting standards and income tax returns which are compliant with the Law.
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