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PPF Vs SSY: Where to deposit money for children?

PPF Vs SSY: If you are wondering where is more profit then this report can be useful.

Small Savings Schemes for children: The Central Government’s Sukanya Samriddhi Yojana (SSY) is a very popular scheme, which is being run keeping in mind the safe future of daughters. This account can be opened in the name of daughters under 10 years of age. At the same time, you should also know that according to the current rules of Public Provident Fund (PPF), you can open a PPF account in the name of your minor. Any individual can open a PPF account in the name of his child. Just till the child is 18 years old, the guardian has to look after this account. Both schemes are popular schemes giving better returns in small savings. If you are wondering where there is more benefit then this report can be useful.

PPF

Any individual looking at the future of his child can also open a PPF account in his name. Parents have to take care of the account till the age of 18 years. After 18 years, the child can manage this account himself.

Sukanya Samriddhi Yojana

Account can be opened in any post office or commercial bank under Sukanya Samriddhi Yojana (SSY). Generally, banks which have the facility to open Public Provident Fund (PPF) accounts, also have the facility to open Sukanya Samriddhi Yojana accounts.

Where can you open an account

Both schemes are run by the Post Office. Apart from this, banks which have the facility to open Public Provident Fund (PPF) account also have the facility to open Sukanya Samriddhi Yojana Account (SSY).

Maturity

PPF: The maturity of a PPF account is 15 years, but it can be extended for 5–5 years.




SSY: The maturity of Sukanya Samriddhi Yojana is 21 years, but parents have to invest only 14 years in it.

Rate of interest

PPF: Interest rate on PPF account is being compounded at 7.1% per annum compounding.

SSY: The current interest rate on Sukanya Samriddhi Yojana is being met at the compounding of 7.6 per cent per annum.

Tax rebate

PPF: If you deposit money in PPF account in the name of the child too, then you will also get the benefit of tax exemption under Section 80C of the Income Tax Act. It is a very popular option for long term investment, where both interest and maturity are tax free.

SSY: Tax exemption can be availed under Section 80C of Investment Income Tax Act under Sukanya Samriddhi Yojana.

Minimum and maximum investment

PPF: The minimum and maximum deposit limit in this account is 500 rupees and 1.50 lakhs. But keep in mind that if the PPF account is also opened in the name of the guardian, then the maximum amount limit will be considered by including both the accounts. It is not that 1.5 lakhs can be deposited annually in both accounts.

SSY: A minimum of 250 rupees can be deposited annually in Sukanya Samriddhi Yojana. A minimum of Rs 250 and a maximum of Rs 1.50 lakh can be deposited annually under the scheme.

PPF: Return Calculator

Suppose you have opened a PPF account for the child as soon as it is 1 year old. First its maturity will be 15 years. By then the child will be 16 years old. At the same time, by increasing it to 5 years, the child will be completed 21 years.

For 15 years of maturity

  • Maximum Monthly Deposit: Rs 12,500
  • Maximum Annual Deposit: Rs 1,50,000
  • Interest Rate: 7.1% Compounding Yearly
  • Amount on Maturity after 15 Years: Rs 40,68,209
  • Total Investment: Rs 22,50,000
  • Interest Benefit: Rs 18,18,209

5 more years, that is, 20 years

  • Total Investment: Rs 30,00,000
  • Amount on Maturity after 20 years: Rs 66.58 Lakh
  • Interest Benefit: Rs 36,58,288

SSY: Return Calculator

  • Annual Deposit: Rs 1.50 Lakh
  • Deposited in 14 Years: 21 Lakh
  • Interest Rate: 7.6 per

cent This amount will be Rs 37,98,225 as per compounding of 7.6 per cent in 14 years.
Then for 7 years, this amount will yield 7.6 percent annual compounding.
This amount on 21 years i.e. maturity: Rs 63.5 lakh
interest benefit: Rs 42.5 lakh

Parvesh Maurya
Parvesh Maurya
Parvesh Maurya, has 5 years of experience in writing Finance Content, Entertainment news, Cricket and more. He has done BA in English. He loves to Play Sports and read books in free time. In case of any complain or feedback, please contact me @ praveshmaurya24@gmail.com
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