Sukanya Samriddhi Yojana: Who all can invest in your daughter’s SSY Account and get tax benefits?


Alok (name changed) prefers to invest in equities to meet long-term goals like education and marriage of his daughter, but his father, a retired government servant and a risk-averse person, wanted that a Sukanya Samriddhi Yojana (SSY) Account should be opened for his granddaughter.

Alok’s father even visited the nearest branch of State Bank of India (SBI) and got a form to get the SSY Account opened, but the bank officials informed him that the account may only be opened by the girl’s parents as they are the natural guardian.

Going by his father’s instruction, Alok opened an SSY Account for his daughter. However, soon after getting his pension at the beginning of every month, Alok’s father visits the bank and invests in the account through cheques.

As, in their presence, only parents of a girl child have the right to open and operate an SSY Account for the child, Alok was not sure if his father is eligible to invest in his daughter’s account.

According to the rules, a legal guardian of a girl child may open only one SSY Account for the child. As natural guardians, any of the parents has the right to open the account. However, in absence of parents, legal guardian, be it grand parent or any other person, who legally adopts the girl child may open an account in her name and operate it till she turns 10 years old.

However, regarding operation of a Sukanya Samriddhi Account, the Gazette of India says:

(1) The account shall be opened and operated by the natural or legal guardian of a girl child till the girl child, in whose name the account has been opened, attains the age of ten years.

(2) On attaining age of ten years, the account holder, that is the girl child, may herself operate the account, however, deposit in the account may be made by the guardian or any other person or authority.

So, in the second point, it is mentioned that the deposit in the account may be made by the guardian or any other person or authority.

However, even if more than one person invest in an SSY account, total deposits cannot cross the present maximum investment limit of Rs 1.5 lakh in a financial year.

Clearing the confusion, Ashok Shah, Partner, NA Shah Associates, said, “It is possible for grandfather of the girl to make contribution to SSY Account. It will be treated as gift from grandfather to the daughter. This being gift from a relative as defined under section 56(2)(x) of the Income tax Act, there is no tax consequence.”

“The SSY scheme has been notified under clause (viii) of sub-section (2) of section 80C of the Income-tax Act vide Notification number 9/2015 S.O.210 (E), F.No. 178/3/2015-ITA-I dated 21.01.2015. Hence, any contribution to SSY will be covered in overall limit of 80C deduction,” he added.

So, Alok’s father is eligible to invest in the SSY Account that Alok has opened for his daughter. But can Alok’s father also claim tax benefits u/s 80C of the Income Tax Act on the investments in his granddaughter’s SSY Account”

“No,” said Shah, adding, “For the purpose of clause (viii) to sub-section 2 to section 80C of the Act, specified person means Parents or Legal Guardian of the Girl child. Accordingly, grandfather will not be eligible to claim benefit u/s 80C, unless the grandfather is legal guardian of the girl child.”

So, apart from parents, grandparents or any other relative or authority may invest in SSY Account of a girl child, but can’t claim tax benefits u/s 80C for such investments, unless the person is legal guardian of the girl.

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