To understand this, first, you need to understand what both the schemes have to offer. Once you gain insights into what the schemes are? How different are the schemes from each other? You can conclude which plan is better.
The Government of India’s Public Provident Fund (PPF) and Sukanya Samriddhi Yojana are two general investment schemes. As a result, any contributions made to these plans are secure. The Sukanya Samriddhi Yojana seeks to protect the future of a girl child. On the other hand, PPF is a tax-free interest-earning scheme. Now let us get down to understanding SSY and PPF in detail so as to know and choose the better plan.
Sukanya Samriddhi Yojana
What is it?
In 2015, the Sukanya Samriddhi Yojana was initiated to help parents of girl children save for their children’s education and marriage expenses, for a duration of up to 21 years. The parents or guardians may invest in the SSY scheme for a girl child aged ten or younger than that.
Here are some of the features and benefits of opening a Sukanya Samriddhi Yojana account along with its details.
- The minimum deposit: Parents or legal guardians must make a minimum contribution of 1,000 and can invest up to 150,000 per year in an SSY scheme.
- SSY has an FE (free, exempt) tax feature, which provides tax deductions on the principal amount invested, interest earned, and the amount obtained at maturity.
- An interest rate of 7.60% is available on the Sukanya Samriddhi Yojana account for the public.
- Once the beneficiary reaches the age of 18, she can withdraw up to 50% of the funds for her educational purposes.
The following are the fundamental requirements for opening an account under the Sukanya Samriddhi Yojana for girl child:
- When a girl reaches the age of ten or is younger, a legal guardian or parent may open an SSY account on her behalf.
- The girl child must be a citizen of India.
- For a family of two children, up to two accounts may be opened.
- If a family has twin daughters, a third SSY may be opened.
To open a Sukanya Samriddhi account, you must send the following documents:
- Type for establishing an SSY account.
- The birth certificate of the girl child must be submitted.
- At the time of account opening, the depositor must have proof of address and identification.
- If more than one child is born in the same order, a medical certificate must be submitted.
- Other documents that the bank or post office would need.
Public Provident Fund
What is it?
A public provident fund (PPF) is a government-sponsored program that seeks to mobilize small savings and generate high returns with tax advantages over time.
Here are some of the features and advantages of investing in a PPF plan:
- A minimum deposit of 100 is needed to open a PPF account, and a minimum investment of 500 is required to keep the account active. The maximum amount that can be invested in a PPF account in a fiscal year is 150,000.
- PPF is an Exempt-Exempt-Exempt program, which ensures that the principal, interest earned, and amount paid at maturity are all tax-free.
- The government determines the PPF returns, which are not subject to market risk.
- PPF interest rates are currently at 7.10%.
The Eligibility Criteria
The following are the fundamental requirements for establishing a Public Provident Fund:
- A PPF account can be opened only by Indian citizens.
- A person may only have one account under his or her name.
- A person can open a second account on behalf of a minor.
- Non-resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not permitted to open a PPF account.
The following are the documents you’ll need to open a PPF account:
- PPF account application form
- Proof of Identity
- Proof of Residence
- Photograph of the account holder
- Signature Proof
Comparison of PPF and SSY
- The primary goal of SSY is to ensure a girl child’s future.
- On behalf of a girl child, a parent or legal guardian may open an account.
- SSY can be opened in the name of a young girl before she reaches the age of ten.
- A girl child’s name can only be used to open one account. In the case of two daughters, a family can open a maximum of two accounts.
- The scheme will last for 21 years or until the girl reaches the age of 18.
- The annual interest rate is 7.6% which is compounded quarterly.
- Individuals can open accounts with post offices or banks that provide the SSY
- Mode of deposit, which allows them to deposit cheques, demand draughts, or cash.
- Section 80C of the Income Tax Act allows you to claim up to $1.50 lakh in tax benefits.
- Only after the girl reaches the age of 18 is she able to withdraw fully
- The primary goal of the PPF plan is to have decent long-term returns.
- The account can be opened by any Indian citizen.
- It is also possible to open a PPF account on behalf of a minor.
- Only one account can be opened, under a person’s name.
- The scheme has a 15-year lock-in term.
- The actual rate of interest is 7.1%, and it is raised annually.
- PPF accounts can be opened at post offices or banks that sell them.
- Cheque, demand draught, online upload, or cash are all acceptable methods of payment.
- Benefits of up to 1.50 lakh can be obtained under Section 80C of the Income Tax Act.
- After the maturity of the deposit, complete withdrawal is authorized.
Here is the overview and key elements that you need to know about the Sukanya Samriddhi Yojana and the Public Provident Fund. If you want to invest in your daughter’s future, SSY is the best choice because it offers better returns and tax benefits. PPF, on the other hand, is a choice to explore if you’re looking for a long-term investment scheme with decent returns.