Sukanya Samriddhi Yojana: Will Central Government increase interest rate from April 1?

Even as Sukanya Samriddhi Yojana’s (SSY) interest rate has remained unchanged for 12 quarters in a row, it is expected that the Government may not increase it for the April-June quarter of FY 2023-23. Sukanya Samriddhi Yojana: Will Central Government increase interest rate from April 1?

According to a report, the SSY interest rate may remain the same in the next quarter. Currently, the Government is offering 7.6% interest on SSY account deposits. In December 2022, the Government revised interest rates for some small savings schemes that do not provide many tax benefits to depositors. However, the interest rates for popular schemes like SSY and Public Provident Fund (PPF) were not changed.

Deposits in the SSY account qualify for tax deduction under Section 80C of the Income Tax Act, subject to the limit of Rs 1.5 lakh per year. This is further subject to the condition that the depositor has not exhausted his Section 80C limit of Rs 1.5 lakh through other schemes such as PPF, National Savings Certificates (NSC), 5-year tax saving Fixed Deposit, ELSS mutual funds etc.

The SSY account interest rate was reduced to 7.6% from 8.4% in the first quarter of FY 2020-21. At that time, the PPF interest rate was also lowered to 7.1% from 7.9%. Despite no change in the SSY interest rate, it still remains one of the best savings schemes due to the tax exemption. The effective interest rate for the SSY scheme works out to be 11.04% for an individual in the 31.2% tax bracket.

The Government is expected to announce the revised interest rates of various small savings schemes by for Q1FY24 by the end of this month. SSY account can be opened in the name of a girl child, aged not more than 10 years, while the maximum deposit allowed in a year is Rs 1.5 lakh.

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