Investment decisions are carried out after a proper analysis of available options and their specifications. Before you start investing, you are required to consider certain factors such as Financial Goal, Returns, Interest Rates, Risks involved; that structure a portfolio. To ease the investment choices and facilitate future savings, the Government of India has launched numerous saving schemes each of which caters different financial requirements of the investors.Â
Sukanya Samriddhi Yojana Account (SSY) and Public Provident Fund (PPF) are considered as two of the safest investment options available for investors seeking financial growth.Â
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Sukanya Samriddhi Account VS Public Provident Fund
Public Provident Fund (PPF) is a tax-free saving scheme regularised by the Government of India in which the interest on the account is specified for each quarter and is paid by the Government. On the other hand, Sukanya Samriddhi Yojana is a small savings scheme by the Government which is centred around the objective of women and girl child welfare in India.Â
An SSY account can only be opened in the name of the girl child whereas anyone and everyone can start a PPF. Both schemes have certain pros and cons. PPF is considered more liquid as compared to SSY. But the latter could possibly give higher returns.
| Parameters | Public Provident Fund | Sukanya Samriddhi Account |
| Rate of Interest | 7.1% (Q3 FY 2024-25) | 8.2% (Q3 FY 2024-25) |
| Entry Age | 15 Years | Birth |
| Amount Payable on entry | Rs.100 | Rs.1000 |
| Minimum Deposit | Rs.500 | Rs.250 |
| Maximum Deposit | Rs.1,50,000 | Rs.1,50,000 |
| Tax Benefit | Rs.1,50,000 | Rs.1,50,000 |
| Maturity | 15 years | 21 years |
| Premature Termination | After 5 financial years | After the age of 18 |
| Nomination | Available | Not Available |
| Loan | Available | Not Available |
Here is an in-depth account of the two Government-backed schemes comparing the tenure, functioning, eligibility, interest rate, tax benefits, objectives of the schemes and interest rates offered by them.
On the basis of Eligibility
Sukanya Samriddhi Account can be opened by the guardian, in the name of the girl child. The maximum age limit to open the account is 10 years. An individual who is a resident of India, not an NRI, can open a PPF account. The age of entry in PPF is 18 years.
On the basis of Interest Rate
The interest rates for both the saving schemes keep changing in the financial year as they are linked to the Government security or G-Sec yields. The ROI is fixed and reviewed by the Government in every quarter. The current SSY Account rate of interest for Q3 (October-December) of FY 2024-25 is 8.2%. This interest is compounded annually. While calculating the interest on a monthly basis, the minimum balance in SSY account between the 10th and the end of the month into consideration. This implies that the investments must be made before 10th of every month.
And, the PPF rate of interest for Q3 FY 2024-25 (October-December) is 7.1%. For calculation of interest, the lowest balance between the 5th to the last day of each month is taken into consideration. So, investments should be made before the 5th of every month.
On the basis of tax benefits
If you invest in PPF, your investments qualify in the Exempt-Exempt-Exempt category. This implies that the investments made in this fund qualify for exemption under Section 80(C) of the Income Tax Act,1961. And, the interest accrued at the time of maturity is exempt from taxes. If you make a contribution of Rs.1.5 lakh per year (which is also the maximum limit of contribution) and you are in the 30% tax category, you will be able to save taxes amounting to Rs.45,000.
Likewise, Sukanya Samriddhi Account also falls under the Exempt-Exempt-Exempt category. The annual contributions are exempt from deductions under Section 80C of the Act. The interest accrued and final amount on maturity are exempt from taxes. Similar to PPF, SSY also allows a maximum contribution of Rs.1.5 lakh per financial year.
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On the basis of the deposit limit
For PPF, the minimum deposit limit is Rs.500 and the maximum is Rs.1,50,000. For Sukanya Samriddhi Account, the minimum deposit limit is Rs.250 whereas the maximum limit is Rs.1,50,000.Â
On the basis of account opening
An eligible individual can open a Sukanya Samriddhi Account with an amount of Rs.1000 while the amount to start PPF account is Rs.100. You can open these accounts at post offices or banks. In case of any deviation from making a minimum contribution every year, an amount of Rs.50/- will be levied on respective account under PPF or SSY.
On the basis of withdrawal age
Partial or complete withdrawal can be made from a PPF account after the end of 6 financial years from the date it was opened. However, it is suggested that one should check with the respective website of the bank to determine when the partial withdrawal is allowed. Some banks, such as ICICI and Axis, allow withdrawals after 5 years and some after 7 years (SBI and HDFC).
For Sukanya Samriddhi Account, withdrawals are possible only after the girl child reaches the age of 18 and only for higher education purpose.
On the basis of account maturity
Public Provident Fund matures after a period of 15 years from the end of the financial year in which the account was issued. However, the investor is allowed to withdraw the maturity amount, extend the scheme period & contributions or extend the scheme period without any further contributions. Whereas, Sukanya Samriddhi Account matures after the girl child reaches the age of 21 years. Partial withdrawal can be done after the age of 18 years solely for higher education purposes.
On the basis of Premature Termination
Premature closure/withdrawals are possible in SSY as well only under any special cases- Untimely death of account holder, Inability to continue the account. PPF account can be closed prematurely after completion of 5 financial years in some special cases- treatment of some serious ailment or life-threatening diseases, higher education of the account holder.
On the basis of nomination
One can appoint nominees in case of PPF but the same is not possible for SSY Account holders.
On the basis of the loan facility
Investors can get loans under PPF which could help you sail through a temporary fund crisis. But, this facility is not available for SSA.Â
Choosing between Sukanya Samriddhi Account and Public Provident Fund is a settlement between flexibility and higher returns. PPF offers more flexibility and SSA gives higher returns. If you have a surplus amount which you want to invest, you can also choose to distribute their investments in both the schemes.
