PPF Vs Sukanya Samriddhi Yojana Scheme, which is better?

Both the Public Provident Fund (PPF) scheme and the Sukanya Samriddhi Yojana scheme are two investment options backed by the Government of India. Hence both these plans assure safety and security of the invested amount. Also, Section 80 C of the Income Tax Act of 1961 allows tax exemptions for the contributions made on them. Here we compare between these two investment options to know how to choose between them.

Nature of these schemes

The main objective of the Sukanya Samriddhi Yojana investment is to secure a girl child’s future. PPF can be understood as a small savings scheme that can give good returns in the long term.

Eligibility to open the account

The parents or the legal guardians of a girl child can open an account on her behalf until she attains 10 years of age. Only one account can be opened in the name of a given girl child under the Sukanya Samriddhi Yojana and a family can only open a maximum of two accounts if there are more than one girl child in the family. On the other hand, any Indian resident can open a PPF account. This account can also be opened on behalf of a minor.

Maturity tenure

The tenure of a SSY scheme is 21 years or when the girl gets married after attaining the age of 18. PPF scheme comes with a lock in period of 15 years.

Minimum and maximum amount of deposit

The minimum amount that can be deposited in a SSY scheme is Rs 250 and it is Rs 500 in case of PPF scheme. The maximum amount that can be deposited in both these schemes per year is Rs 1.5 lakhs.

Tax benefits

Section 80 C under the Income Tax Act of 1961 allows tax exemptions for an upper limit of Rs 1.5 lakhs per year invested in both these schemes. In this regard, these schemes are just similar to each other.

Interest rates

Both these schemes come with an interest that is compounded on an annual basis. The interest rates of both these schemes vary year on year and at present the interest rate is 7.9% for SSY and it is 8.4% for PPF.

Managing the accounts

An SSF account or a PPF account can be opened in a bank or post office that offer these schemes. Also, they can be transferred from a bank to post office and also vice versa.

Liquidity

In SSY scheme, complete withdrawals are allowed only when the girl child attains 21 years of age or when her marriage is arranged after her 18th year. Up to 50% of the amount accrued can be withdrawn for the girl’s education or marriage after the girl attains 18 years. In a PPF scheme, partial amount (50% of what has accumulated) can be withdrawn after the 6th year of opening the account.

How to decide between them

Sukanya Samridhi Yojana and a PPF scheme have many things in common between them. However, the choice of the right investment option will have to depend on the reasons for the investment and what you expect from the investment.