Years ago, the budget of 2015-16 brought a provision to make interest earned on all contributions towards the Sukanya Samriddhi Scheme absolutely exempt from taxes. Sukanya Samriddhi Scheme which is already part of 80C portfolio now became EEE (Exempt, Exempt, Exempt) Scheme. This means that contributions will be eligible for exemptions, interest earned will be exempt and maturity amount or withdrawal will also be exempt.
Another scheme with such EEE benefits is PPF which is also qualified for 80C benefits along with exemptions on interest earned and maturity amount. However, comparing between the two will be a hard one. So let us see a point by point comparison between Sukanya Samriddhi Yojana (SSY) and Public Provident Fund (PPF).
Account Opening
The Account in case of SSY only be opened for a girl child and that too for two girls in a family (exception of third one in case of twins or triplets) however in case of PPF, the account may be opened for any individual of the family. Another restriction in case of SSY is the age bar of 10 years even in case of a girl child. Both schemes require the similar documents for account opening and accounts may be opened with Post offices or Authorized branches of Various Banks. The additional requirement in case of SSY is Birth Certificate of the girl child. In case of PPF, few private banks also offer the facility which is not there in SSY.
Deposits
The Maximum deposit limits in both cases of SSY and PPF stand at 1.5 lacs. Both are exempt upto contribution of 1.5 lacs per year. The mode of payment in case of SSY is cash, cheque and demand draft however additionally in case of PPF, the deposits can be made through online transfer which makes it very comfortable. The number of deposit transactions allowed in PPF is 12 however there is no such restriction in case of SSY.
Interest Earned
The interest earned on PPF is 8.1% currently which is lower than 7.6% of SSY, both compounded annually. In both cases, the interest rates are announced by the Government of India every year.
Investment Period
The PPF is having a maturity of 15 years that may be extended in a block of 5 years. In case of SSY, the period of investment is 21 years, however it may vary with age of girl child. It matures on the date of marriage of girl child along with a withdrawal option of 50% amount at the age of 18 years. So, if a girl is just 10 years and gets married at the age of 22, the maturity will stand at 12 years only. So, in the case of SSY, the maturity is custom as may be the case. This is a big advantage as you may not have to wait for the maturity period for your family decision.
Also, if you continue to retain account even after maturity, you will continue to earn interest however you can deposit the amount only till completion of 14 years from the date of account opening.
Account Operations
Unlike PPF, where the account can be operated by the guardians only, in case of SSY, the account can be operated by the girl child after she attains the age of 10 years. However, the guardians can only get the account opened and deposit money unlike PPF where grandparents may also act as depositors.
Maturity or Withdrawal
In both cases the maturity or withdrawal amount is exempt from the tax. In case of PPF you may withdraw partially or take a loan after 7 years of account opening which may not be availed in case of SSY. However, there is provision of premature withdrawal in case of death of account holder or for few specific reasons.
Conclusion
Though both schemes bring in the host of benefits but there is always a pros and cons of everything. Talking about Sukanya Samriddhi Scheme, it is a best suited scheme for the people who are looking to invest for the bright future for their daughters. Higher interest rates along with the flexibility in maturity makes it ideal for financial planning. The scheme will give you money when you need it irrespective of the maturity timings and thus you may sleep tension free. The drawback is the eligibility criteria that restricts the participation of girl children born before Dec 01, 2004 as eligible to avail this scheme. The comfort of online deposit is now a must have and should be introduced in time to come.
So if you are eligible for this scheme, then you must open the account, just like buying gold, for the prosperity and bright future of your daughter
