Tax benefits for girl child under the Sukanya Samriddhi Account Scheme
(Section 80C and Section 10(11A) of the Income Tax act )
A special small savings instrument for the welfare of the girl child has been introduced under the Sukanya Samriddhi Account Rules, 2014 ,pursuant to the Budget announcement in July 2014. The following tax benefits have been envisaged in the Sukanya Samriddhi Account scheme:-
(i) The investments made in the Scheme will be eligible for deduction under section 80C of the Act.
(ii) The interest accruing on deposits in such account will be exempt from income tax.
(iii) The withdrawal from the said scheme in accordance with the rules of the said scheme will be exempt from tax.
A new clause (11A) is inserted in section 10 of the Income Tax Act by Finance Act 2015 so as to provide that any payment from an account opened in accordance with the Sukanya Samriddhi Account Rules, 2014 shall not be included in the total income of the assessee. As a result, the interest accruing on deposits in, and withdrawals from any account under the scheme would be exempt.
The Scheme has been notified under clause (viii) of sub-section (2) of section 80C vide Notification number 9/2015 S.O.210 (E),F.No. 178/3/2015-ITA-I dated 21.012015
With a view to allow the deduction under section 80C to the parent or legal guardian of the girl child, amendment of section 80C of the Act is proposed to be made so as to provide that a sum paid or deposited during the year in the Scheme in the name of any girl child of the individual or in the name of any girl child for whom such individual is the legal guardian, would be eligible
for deduction under section 80C of the Act.
Date of Applicability of provisions relating to Tax benefits for girl child under Sukanya Samriddhi Account Scheme
These amendments will take effect retrospectively from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent assessment years.
Amount of Investment upto Rs 150000 per Financial year eligible for Tax benefits for girl child under Sukanya Samriddhi Account Scheme as per Section 80C
Section 80C
80C. (1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited in the previous year, being the aggregate of the sums referred to in sub-section (2), as does not exceed one hundred and fifty thousand rupees
(2) The sums referred to in sub-section (1) shall be any sums paid or deposited in the previous year by the assessee—
—
—–
(viii) as subscription, in the name of any person specified in sub-section (4), to any such security of the Central Government or any such deposit scheme as that Government may, by notification( Notified scheme : Sukanya Samriddhi Account ) in the Official Gazette, specify in this behalf;
(4) The persons referred to in sub-section (2) shall be the following, namely:—
—-
(ba) for the purposes of clause (viii)of that sub-section, in the case of an individual, the individual or any girl child of that individual, or any girl child for whom such person is the legal guardian, if the scheme so specifies;
Tax benefits for girl child under Sukanya Samriddhi Account Scheme as all Interest u/s 10(11A) is exempt.
Section 10(11A)
10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included
—-
“(11A) any payment from an account, opened in accordance with the Sukanya Samriddhi Account Rules, 2014 made under the Government Savings Bank Act, 1873 (5 of 1873);
Clauses of Finance Bill 2015 relating to Tax benefits for girl child under Sukanya Samriddhi Account Scheme
Clause 7 of the Bill seeks to amend section 10 of the Income-tax Act relating to incomes not included in total income.
It is proposed to amend the aforesaid section by inserting a new clause (11A) so as to provide that any payment from an account opened in accordance with the Sukanya Samriddhi Account Rules, 2014 made under the Government Savings Bank Act, 1873, shall not be included in the total income of the assessee.
Budget speech of Shri Arun Jaitley, Union Finance Minister on Budget 2015-2016 dated 28-2-2015 relating to Tax benefits for girl child under Sukanya Samriddhi Account Scheme
“7.1 It is proposed to provide that investment in Sukanya Samriddhi Scheme will be eligible for deduction u/s 80C and any payment from the scheme shall not be liable to tax. “
“Investments in Sukanya Samriddhi Scheme is already eligible for deduction under Section 80C. All payments to the beneficiaries including interest payment on deposit will also be fully exempt. “
Related Post