Prime minister of India, Narendra Modi, has recently launched Sukanya Samriddhi account scheme for a girl child. If you read our article on various provisions of public provident fund or PPF scheme then you will find lots of similar features are also available in Sukanya Samriddhi Account scheme introduced specifically for a girl child.
In this article we will be discussing difference between Sukanya Samriddhi Account and PPF to know which one is a better investment option for a girl child. We will also be looking into tax benefits and other features at the end of the post.
Comparison of Sukanya Samriddhi Account with PPF
| Particulars | Sukanya Samriddhi Account | Public Provident Fund (PPF) |
| Who can open these accounts | Parents or natural or legal guardians in the name of girl child | Anyone including girl child |
| Age limits | 10 years or less than 10 years of age i.e. from the birth till she attains the age of 10 years | No age limit |
| Where to open | Post office or authorised private and PSU banks | Post office or authorised private and PSU banks |
| Maximum number of deposits in a year | No Limits Specified | 12 in a year |
| Limits in number of accounts per person | One | One |
| Interest rate per annum | 9.1% (for fiscal year 2014-2015) | 8.7% (for fiscal year 2014-2015) |
| Minimum contribution limit per year (in rupees) | 1000 | 500 |
| Maximum Contribution limit per year (in Rupees) | 150000 | 150000 |
| Tax deduction under section 80C | Yes, Available up to Rs 150000 per year | Yes, Available up to Rs 150000 per year |
| Is interest earned from these investments taxable | No, not taxable (New provision in budget 2015-2016) | No, not taxable |
| Is maturity amount taxable | No, not liable to tax, total amount received at the time of maturity is exempted | No, not liable to tax, total amount received at the time of maturity is exempted |
| Partial withdrawal | 50% allowed when girl reaches the age of 18 years | Allowed after 7 years of opening PPF account |
| Maturity time limit | On marriage of the girl child or 21 years from the date of opening Sukanya Samriddhi Account, whichever is earlier | 15 years |
| Can maturity period be extended | No such provision | Yes, can be extended for another 5 years. There is no restriction on number of such extension in PPF scheme but such extension should be for a 5 years tenure |
| Penalty for not contributing(in Rupees) | 50 per non contributing year | 50 per non contributing year |
| What is the allowed mode of deposit to these schemes | Cash or Demand Draft or Cheque | Cash or Demand Draft or Cheque |
| Loan | No, loan cannot be taken | Loan can be taken from the third year of opening of PPF account to the sixth year |
| Transferability | Yes, available | Yes, available |
If you look at the flexibility of extending the maturity period of such scheme then you will find that Sukanya Samriddhi Account scheme has tenure of 21 years with contributing term of 14 years. This means after completion of 21 years it cannot be extended further. Whereas, in PPF, after completion of 15 years tenure it can be extended in multiplication of 5 years for unlimited number of times.
Interest Rate for Sukanya Samriddhi Account is higher compare to returns on PPF. We hope this will continue in future.
All other features in PPF compare to Sukanya Samriddhi Account are almost similar.
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If you are not a risk taker and wants to save your money for the future of your girl child’s education or marriage then we suggest you to go for Sukanya Samriddhi Account scheme. We also recommend opening a PPF account if you are looking for an investment of more than Rs 150000 per year for a girl child.
