The recently launched Sukanya Samriddhi
Account (SSA) and Public Provident Fund (PPF) can be useful instruments for
saving for the future needs of the children. The Sukanya Samriddhi Account can
only be opened in the name of the girl child while PPF scheme can be availed by
all. Experts say PPF scores over Sukanya Samriddhi Account in terms of
liquidity (partial withdrawal facility) and other flexibilities. But Sukanya
Samriddhi Account could potentially give higher returns, they add.
Eligibility: A Sukanya Samriddhi Account can be opened by
the guardian in the name of a girl child till she attains the age of ten years.
Only one account is allowed per girl child. Parents can open this account for a
maximum of two children.
Limit: An investor can open PPF accounts in the
name of minors but a maximum of Rs.
1.5 lakh can be deposited every year including
all the accounts. In case of Sukanya Samriddhi Account, a maximum of Rs 1.5
lakh can be deposited per account.
Account Opening: A Sukanya Samriddhi
Account can be opened with an amount of Rs.
1,000 while it is Rs 100 for a PPF account.
Both these accounts can be opened at post offices and banks.
A charge of Rs 50 will be levied both in
Sukanya Samriddhi Account and PPF if the minimum contribution is not made every
year.
Minimum and maximum contribution: In an
Sukanya Samriddhi Account, a minimum of Rs. 1,000 has to be deposited every
year and the maximum limit is Rs. 1.5 lakh. And there is no limit on number of
deposits either in a month or in a financial year.
In case of PPF, an individual but has to
deposit a minimum of Rs. 500 in a financial year while the maximum limit is
Rs.1,50,000. And deposits can be made in lump-sum or in 12 installments.
Maturity: The Sukanya Samriddhi Account can be closed
after the girl child in whose name the account was opened completes the age of
21. If account is not closed after maturity, the balance will continue to earn
interest as specified for the scheme from time to time. The maturity period of
a PPF account is 15 years but it can be extended in blocks of five years.
Taxation: In terms for taxation, deduction up to Rs.
1.5 lakh is allowed under Section 80C in both the Sukanya Samriddhi Account and
PPF. Also, both the schemes qualify for tax-free status on withdrawal and
interest income.
Withdrawal: Partial withdrawal is permissible every year
from the seventh financial year of opening the PPF account. In case of Sukanya
Samriddhi Account, up to 50 per cent of the accumulated amount can be withdrawn
after the account holder turns 18 while full withdrawal is possible after she
turns 21.
Interest rate: The interest rate on Sukanya Samriddhi
Account and PPF is not fixed. The government will every year declare the interest
rate of the scheme. For 2014-15, the government would be paying 9.1 per cent
interest on Sukanya Samriddhi Account against 8.7 per cent on PPF.
Loan: A loan facility is available from the third
financial year of opening the PPF account. In Sukanya Samriddhi Account there
is no such facility.
What Experts Say: Anil Rego, CEO of Right
Horizons, a wealth management firm, said the choice between Sukanya Samriddhi
Account and PPF is a trade-off between more flexibility and higher returns. PPF
offers more flexibility while Sukanya Samriddhi Account can potentially give
higher returns, he added. Investors with surpluses can look at the distributing
their investments in both the schemes, Mr Rego added.
Suresh Sadagopan, the founder of Ladder 7
Financial Advisories, says both the Sukanya Samriddhi Account and PPF are
similar schemes in nature in the debt space under Section 80C. The Sukanya
Samriddhi Account is a good alternative if investors are comfortable at locking
their money for a long time, he added.
Source : NDTV
