Sukanya Samriddhi Yojana for NRI: Eligibility, Rules & Tax Benefits

Sukanya Samriddhi Yojana (SSY) is one of the most popular small savings schemes in India for girl children. However, many Non-Resident Indians (NRIs) wonder whether they can invest in SSY and continue the account after moving abroad.

In this guide, we explain:

• Whether NRIs can open an SSY account
• Eligibility rules for NRI daughters
• What happens if the account holder becomes an NRI
• Tax benefits and withdrawal rules
• Important RBI and government guidelines

If you are an NRI parent planning long-term investments for your daughter, this article will help you understand all the important SSY rules.

Must Read – PPF for NRI

Can NRIs Invest in Sukanya Samriddhi Yojana?

No, NRIs cannot open a new Sukanya Samriddhi Yojana (SSY) account. The scheme is available only for resident Indian girl children. If an existing SSY account holder becomes an NRI, the account is treated as closed from the date of change in residential status.

What is Sukanya Samriddhi Yojana (SSY)?

The Sukanya Samriddhi Account Scheme (SSA) or Sukanya Samriddhi Yojana (SSY) was launched by Prime Minister Sh. Narendra Modi on January 22, 2015, as part of his “Beti Bachao, Beti Padhao” (Save the Girl Child, Educate the Girl Child) social campaign. The official statement at the time of the launch stated, “The scheme primarily ensures equitable share to a girl child in resources and savings of a family in which she is generally discriminated as against a male child.

To make the scheme attractive and popular among parents of girl children, the rate of interest in the year of the launch was 9.1%, among the highest in the small-savings schemes at the time. even after the interest rates saw historic lows of under 5% on long-term deposits, the interest on SSY is still at 8.2%.

To further sweeten the deal, the government offers EEE (Exempt-Exempt-Exempt) tax benefits. You get a tax-deduction on making regular investments, no tax on the accrued interest income, and finally no tax on maturity withdrawal.

All the above factors make SSY one of the most attractive small-savings schemes targeted for the benefit of the girl child.

Must Read – Pravasi Pension Scheme for NRIs

Key Features of SSY

• Deposit limit per financial year: Minimum ₹250/- and Maximum ₹1.5 lakhs. The minimum deposit limit was ₹1,000/- before 2019.
• Eligibility: In the name of a girl child between 0 and 10 years.
• Account Term: 21 years from the date of account opening.
• Premature withdrawal: To meet the higher education expenses of the account holder.
• Premature Closure: If the account holder gets married after attaining 18 years, then the account can be closed.
• You can open an SSY account at Post Offices and Authorized Bank Branches.
• You can transfer the SSY Account to any post office or bank branch across India.
• Tax benefit
  • Deduction of up to ₹1.5 lakhs u/s 80C of the IT Act.
  • No tax levied on interest accrued on deposit.
  • No tax is applicable on withdrawal on maturity, for meeting higher education expenses, or after marriage.

The current rate of interest is  8.2% p.a.

SSY Eligibility Rules for NRIs

Now that we know that the Sukanya Samridhhi Yojana is one of the best schemes, the next question is how do you as a parent open an SSY account for your girl child?

The answer is not straightforward. There are a few criteria, as far as the residential status of your girl child is concerned. Most likely, all your children are living with you, especially if you are living abroad for a long time. it also quite likely, that your children were born in your country of residence and have that country’s nationality by default. In that case, your child would be called either a PIO (Person of Indian Origin) or an OCI (Overseas Citizen of India).

Being a PIO or an OCI means that you are recognized for your Indian roots, but you are not an Indian citizen. You still hold a passport of some other country. Being a PIO and an OCI makes you eligible for some benefits and relaxation with regards to capital control and investments, but not all avenues are open to you.

You can open an SSY account in the name of your daughter only if:

• You, your spouse, and your daughter are all Indians and reside in India.
• You or Your spouse are not Indians, your daughter is an Indian, and you all reside in India.
• You or Your spouse are not Indians and do not reside in India, but your daughter is an Indian and she resides in India.

The keyword here is that the girl child must be an Indian citizen residing in India. The scheme is so restrictive, that when you and your girl child become an NRI, the SSY account in her name is deemed to be closed and you will no longer earn interest on it.

It is mandatory to inform the post office or the bank branch within one month about the change in the citizenship and/or residential status of the girl child. Therefore, if you are going abroad to settle, you should withdraw the entire sum.

We may wish that the government changes the rules and allow NRIs to open the SSY account, just like they can open PPF accounts.

Please share your experience of Sukanya Samriddhi Yojana – in case you invested in this when you were a resident Indian