In the last budget FM Mr. Arun Jaitley has increased the interest rate (9.2%) for Sukanya Samriddhi Account new saving scheme. The scheme which was launched earlier this year is a very strong step towards the prosperity of girl child in our society. Though this is a small deposit scheme for the girl child, but we can compare Sukanya Samriddhi Account vs PPF account as this is also another 80C instrument only.
Both SSA & PPF account are similar schemes in terms of tax saving. Let us check the key points, both similar & distinct features below.
Sukanya Samriddhi Account vs PPF Account in Tabular Format
Who Can Open: In Sukanya Samriddhi account, only parents/legal guardian of a girl child up to 10 years of age are eligible to open an account, while in PPF, every Indian citizen is eligible to open & get benefited from it.
Where to Open: SSA can be opened only in the post office or 28 authorised bank, whereas PPF account can be opened in post offices along with all public sector & few private sector banks.
Investment Time Limit: One can invest upto 14 years from the date of opening of the Sukanya account. For PPF the minimum investment period is 15 years.
Minimum & Maximum Amount Balance: For Sukanya Samriddhi account, the minimum& maximum balance limit is 1000/- & 1,50,000/- respectively. Minimum 500/- & maximum 1,50,00/- can be the balance in PPF account.
Maturity Period : Maturity period is 21 years for SSA & 15 years for PPF account.
Interest Rate: Both SSA & have floating interest rates. For financial year 2015-16 it is 8.7% for PPF & 9.2% (which is highest among all small deposit schemes) for SSA account.
Tax Rules : PPF is an EEE scheme. In last budget presentation finance minister has made this scheme as EEE which means the amount deposited, the interest earned & the maturity amount is tax exempted under section 80C.
To know more about tax rules of SSA you must read SSA Tax Benefits.
Frequency of Compounding : The amount earns an interest which is compounded yearly in case of both the schemes.
Partial withdrawal Period : One can partially withdraw an amount for the girl child’s education purpose, provided she is of 18 years age. Partial withdrawal is easier for PPF, where withdrawal is allowed after 7th year.
Partial Withdrawal Amount : For Sukanya Samriddhi Account the limit is upto 50% of the balance. Withdrawal is allowed up to 50% of the 4th year or immediate preceding years balance from PPF account.
Premature Closure: For PPF account premature closure can happen only in the case of death of the account holder. In case of Sukanya Samriddhi account, premature closure can happen in few situations like death of the girl child, parents/ legal guardian is unable to continue the account (with proper verification).
No. of accounts : One account per girl child is allowed for SSA (two account per family). Third account will be allowed to open if the first birth results into triplet girl children or in case of birth of twin girls in the second birth or if the.
Modes of Deposit : Amount can be deposited through cash/ cheque/ demand draft to SSA account, whereas online facility is available along with other three options for PPF.
Loan Facility: A loan can be taken on PPF account from the third year of opening of the account till sixth year while no loan is granted on Sukanya Samriddhi account account.
Transfer of Account : PPF account can be easily transferred from one authorized bank to another or one post office to another. Sukanya Samriddhi Account can be transferred in case the girl child is moving to some other location.
Frequency of Investments :- There is no limit for how many time you can deposit into Sukanya Samriddhi account in a financial year, But in PPF one can make only 12 deposits.
Extending Facility :Sukanya Samriddhi account is not extendable after it completes 14 years of investment. But for PPF after the completion of 15 years you can extend it in 5 years blocks for an unlimited time period.
Penalty : For both SSA & PPF, if the depositor is not maintaining the minimum balance of 1000/- for any financial year, a penalty of 50/- will be levied.
Nomination Facility : Legally someone can be made nominee for PPF account, for SSA this option is not available.
Liquidity : Sukanya Samriddhi account has less liquidity than PPF. You can withdraw for the girl’s education purpose, only after she attains 18 years of age.
Share your comments if you think any other key points can be considered while comparing Sukanya Samriddhi Account vs PPF account.