The Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY) are two tax-effi cient government savings schemes that offer good interest rates. Both are suitable for creating a corpus over a long term, though SSY offers higher interest rates than PPF. Here’s how to choose between them.
Precondition
Only parents of a girl under the age of 10 years can open an SSY account. There is no such restriction for a PPF account.
Lock-in
The maturity period of an SSY account is 21 years while it is 15 years for PPF. One can take a loan against the PPF balance, but not in case of SSY. An SSY account can be closed before maturity period if the daughter is getting married and is above 18 years of age. A PPF account can be extended for blocks of fi ve years after the initial period of 15 years. This option is not available for SSY.
Investment amount
Maximum investment per year for both is Rs.1.5 lakh. The minimum amount for PPF is Rs.500 while it is Rs.250 for SSY.
Where to open
Both can be opened at a post office or a bank. It is relatively easier to manage with a bank as transfers to the account can be made online. To make online transfers for a post offi ce account, one needs to open a post offi ce savings account and transfer from there to the PPF/SSY account (limited to Rs.25,000 per transfer).
Withdrawal
For SSY, withdrawal before 21 years is possible if the girl is above 18 years and getting married. Also, up to 50% of the account balance can be withdrawn for her higher education. For PPF account, partial withdrawal can be made in the seventh year.
Points to note
1.) An SSY account can be opened for up to two daughters.
2.) While a guardian opens an SSY account for a girl child, she can operate it after becoming an adult
Source By: economictimes
