The
Sukanya Samriddhi and has grabbed the attention of investors, because it is
pretty much an exclusive scheme for the girl child.
While
the best scheme to compare would be the PPF, it is beacuse under both the
schemes there is a complete tax exemption of interest income. Both the schemes
also get tax benefit under Sec 80C of the Income Tax Act.
However,
both the interest rates will be notified by the government on a yearly basis
and it does not offer a fixed income through the life of the investment. Interest
will be calculated on yearly basis by compounding method.
Now
let us see some difference and similarities between the two
Difference between
Sukanya and PPF
|
Sukanya Account
|
PPF
|
Age
|
Girl child between
0-10 age
|
No Age limit
|
Where to open
|
Post office and
nationalized banks
|
Post office,
nationalized banks, also private banks.
|
Minimum Contribution
|
Rs 1,000
|
Rs 500
|
Interest Rate for 2015-16
|
9.2% per annum
|
8.70% per annum
|
Tax Benefit
|
Contributed Amount
will be deductible u/s 80C.
|
Contributed Amount
will be deductible u/s 80C
|
Tax Benefit on the
interest earned
|
Interest Earned is tax
free under PPF.
|
Interest Earned is tax
free under PPF.
|
Maturity
|
21 years from the date
of opening of account.
|
15 years from the
fiscal year of opening of account.
|
Penalty
|
Rs 50 per year (If
minimum contribution is not made)
|
Rs.50 per year
|
Loan
|
No loan can be availed
|
No loan can be taken
from the sixth year
|
Taxation on Maturity
|
No tax will be levied
on the maturity amount.
|
No tax will be levied
on the maturity amount.
|
Maximum entry age
limit
|
Only for girls aged 10
years or less from the date of birth
|
No age limit
|
Who can open
|
Only for girl Child
|
Anyone
|
Partial withdrawal
|
50% fund can be
withdrawn when girl attains 18 years
|
Partial withdrawal is
allowed from 6th year onwards.
|
Conclusion
Both
have the same tax benefit, however, if you want to choose between the two for a
girl child one can consider Sukanya Samriddi account as it offers higher tax
benefit than PPF.
Lock
in period is high and no loan facility will only help you to save more and at
the best benefit out of it.
If
you are not a traditional investor, this product may not suit you as there is
no online facility as of now and less liquidity compared to PPF.
Just
a word of caution, which we ourselves are not clear on. What happens when the
bread earning member, who used to contribute in the Sukanya Samriddhi expires
and they cannot contribute say after 5 years.
There
is a lock-in period that is applicable and what happens when one cannot
contribute and cannot withdraw.
