There are several saving schemes to save for your daughter future. However, one of the popular saving scheme is Sukanya Samriddhi Yojana. Often some of the readers are asking questions whether they should stick to Sukanya Saving Scheme or consider Public Provident Fund to save for daughter education or marriage. Both have their merits and demerits. I thought it is good idea to pen down few point which can help such parents to take a decision. How is Sukanya Samridhiddi Yojana Scheme? What are the features of Public Provident Fund? Among Sukanya Samriddhi Yojana Vs PPF (Public Provident Fund) which is better investment option to save for your daughter?
Features of Sukanya Samriddhi Yojana (SSY)
Sukanya Samriddhi Yojana (SSY) is a deposit scheme launched as a part of ‘Beti Bachao, Beti Padhao campaign in which the Government of India took the initiative to save the girl child as well as to facilitate her higher education.
Key Features of Sukanya Samriddhi Yojana Scheme
Sukanya Samriddhi Yojana Account can be opened any time after the girl child is born till she turns 10 years of age.
It is a small deposit scheme to promote savings and secure the future of the girl child. The account can be opened by the natural or legal guardian of the child before she turns 10.
The account can be opened in any post office or authorized branches of a commercial bank.
The account remains operative for 21 years or the marriage of the child, whichever is earlier after she turns 18.
Maximum of two accounts can be opened in a family who has two girl childs.
The minimum deposit amount is Rs 250 per year and the maximum is Rs 1,50,000.
Only resident Indian Citizen girl child is eligible to open an account under SSY and she must remain under this status until the maturity or the closure of the account.
To facilitate funds for her higher education, partial withdrawal is possible after the girl child turns 18 years of age.
The deposits can be made through cash, cheque, and demand draft.
The account can be prematurely closed in the event of the death of the account holder and few more instances. You can know more info at how to do premature closure / withdrawal in Sukanya account.
Contributions to SSY would quality for for income tax deduction u/s 80c up to Rs 1.5 Lakhs in a financial year.
Features of Public Provident Fund (PPF)
Public Provident Fund is a small savings scheme launched by the Ministry of Finance in the year 1968 to encourage savings among the common man by providing them a good rate of interest.
Key Features of PPF
It is a popular investment tool for individuals with a low – risk appetite.
The account can be opened by any person who is a citizen of India and at any age.
The minimum investment is Rs 500 per year and the maximum is Rs. 150,000 in a financial year. Such amount up to Rs 1.5 Lakhs qualifies for income tax deduction u/s 80c of income tax act.
The scheme has a lock-in period of 15 years before which the funds cannot be withdrawn completely.
The total interest accrued on PPF is exempted from tax along with the entire amount redeemed from the account.
To get the interest of the entire month, it is suggested that the amount should be deposited by the 5th of the month.
A PPF account holder can take a loan against the balance from the beginning of the 3rd financial year till the end of the 6th year from the date of account opening.
Comparison of Key Features between Sukanya Samriddhi Yojana Vs PPF
Below is the difference sketched between the two schemes based on a few important points.
|Basis of Difference||Sukanya Samriddhi Yojana||Public Provident Fund|
|Eligibility||Only Indian resident girl child who is below the age of 10 can open this account.||All Indian citizens can open this account regardless of gender and age.|
|Interest Rate||The government fixes the interest rate on a quarterly basis. Currently, the scheme offers an interest rate of 7.6% per annum.||The PPF interest rate is fixed by the Finance Ministry every quarter. Presently, it is offering an interest rate of 7.1% per annum.|
|Tenure||The scheme comes with a tenure of 21 years or till the marriage of the girl after she turns 18. The operation of the account is not permitted after the marriage of the girl child.||The scheme comes with a tenure of 15 years. The tenure can be extended in the block of 5 years after the completion of the tenure of 15 years. There is no need to deposit money in the extended period.|
|Period of investment||One must invest every year for at least 15 years from the date of opening the account to earn interest till maturity.||Every year, one has to deposit a minimum of Rs. 500 in the PPF A/c for 15 years. Thereafter, if he wishes for an extended block of 5 years, it is not necessary to invest during that tenure.|
|Minimum Investment||SSY A/c can be opened with a minimum investment of Rs. 250. Thereafter, any amount in the multiples of 100 can be deposited with a minimum investment of Rs. 250 in a financial year.||PPF A/c can be opened with a minimum amount of Rs. 100. Thereafter, an account holder can make deposits in the multiples of 50 any number of times in a year. The minimum investment cannot be less than Rs. 500 in a financial year.|
|Maximum Investment||One can invest up to Rs. 1,50,000 in a financial year.||One can invest up to Rs. 1,50,000 in a financial year.|
|Obtaining of the loan||No loan can be obtained against this scheme.||One can obtain a loan from a PPF account subject to certain conditions.|
|Income Tax Benefits on Investment||Contribution up to Rs. 1,50,000 can be availed as deduction under section 80C of the Income Tax Act||Contribution up to Rs. 1,50,000 can be availed as deduction under section 80C of the Income Tax Act|
|Taxation on maturity amount||The maturity amount is all tax-free.||The maturity amount is tax- exempt.|
|Premature Withdrawal Rules||50% of the amount can be withdrawn from SSY A/c once the girl child attains the age of 18 years and it is allowed for higher education or marriage.||Partial withdrawal can be made after the completion of 5 years of the policy (excluding the year of opening)|
|Premature Closure Rules||Premature closure is possible only in the case of the death of the account holder.||Premature closure is not allowed within 5 years of opening the account. Thereafter, it can be closed only on specific conditions.|
|Transfer of accounts||The account can be transferred across India without any charges.||The account can be transferred to any bank or post office across India without any charges.|
Sukanya Samriddhi Yojana Vs PPF – Which is a better investment for your daughter?
Both the schemes offer great investment avenues, especially for the girl child. It is always a better idea to initiate savings for children as early as possible. If you are starting to save for your girl child before she is 10 years of age, then SSY is the best option with high returns. Currently, SSY is offering the highest tax-free returns with a Sovereign guarantee. It provides you exempt-exempt-exempt (EEE) status. It is one of the best investment options to accumulate funds for your daughter’s higher education and marriage. But, if you are initiating the investment when she is already nearing 10 years of age, one can go for PPF.
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