Public Provident Fund (PPF) has been the most common long term investment option for various sections of people since ages.This is because of fixed returns and the tax benefit attached to it.
To have a deeper insight you can refer : PPF Account,PPF Interest rate,PPF Rules – The Ultimate guide !
The government however launches various new schemes to attract the Individuals and promote savings in the long run.Hence, Sukanya Samriddhi Yojana was launched in the Dec 2014 to encourage savings and ensure financial security for the girl child in India.
Since the launch of Sukanya Samriddhi scheme potential investors are in a state of confusion as to which long term option is better PPF Account or Sukanya Samriddhi Account.
For detailed analysis you can refer : Sukanya Samriddhi Yojana – All you need to know !
Public Provident Fund(PPF) vs Sukanya Samriddhi Yojana(SSY) :
The similarities as well as the differences between the two have been listed below:
| Public Provident Fund | Sukanya Samriddhi Account | |
|---|---|---|
| 1. | It can be opened in the name of any Resident Individual. | Opened only in the name of the GIRL CHILD. |
| 2. | There is no age limit. | It can be opened right from the birth till the girl child attains 10 years age. |
| 3. | Rate of Interest was 8.1% for first 2 quarters of F.Y.2016-17.For 3rd quarter rate of interest is 8 % p.a | Rate of Interest was 8.6% for first 2 quarters of F.Y.2016-17.For 3rd quarter rate of interest is 8.5% p.a |
| 4. | Minimum Investment required to open the account is Rs.100 | Minimum Investment required to open the account is Rs.1000 |
| 5. | Minimum of Rs.500 to be deposited every year. | Minimum of Rs.1000 to be deposited every year. |
| 6. | Maximum Investment is Rs.1.5 lakhs | Maximum Investment is Rs.1.5 lakhs |
| 7. | Deposit can be made in lumpsum or 12 instalments. | No limit fixed on number of deposits during the year. |
| 8. | Eligible for Income tax Deduction U/s 80 C | Eligible for Income tax Deduction U/s 80 C |
| 9. | Maturity period is 15 years from date of opening the account. | Maturity period is when girl child is of 21 years of age. |
| 10. | Partial withdrawl facility available from 7th financial year of opening the account. | 50% of accumulated amount can be withdrawn when girl child attains 18 years of age. |
As per experts ,PPF is a more flexible option whereas Sukanya Samriddhi Account is better for those who can afford long lockin period.Presently,Sukanya Samriddhi Yojana is fetching more interest than PPF so looked upon as a good alternative for long term investors who want high returns and no risk.The tax benefits are same on both PPF and SSY.Both,PPF and SSY provide tax free returns and are also eligible for a Tax deduction U/s 80 upto a maximum of Rs.1.5 lakhs.
Here,you need to be clear that,the total Tax deduction Under Section 80 C can be 1.5 lakhs only.So,if you invest in both PPF and Sukanya Samriddhi Scheme,you won’t get any additional tax benefit.The combined deduction for deposit made in both PPF and SSY accounts cannot exceed Rs.1.5 lakhs during a financial year.
However,based on your financial objectives,you can diversify your portfolio by investing partially in both of these and enjoy good returns and tax benefits also.
Also go through our popular blog post : PPF or ELSS – Which is better Investment ?
For other Long term Investment options refer : 7 Best Long term Investment Options in India !