Small Savings Schemes for children: The Central Government’s Sukanya Samriddhi Yojana (SSY) is a very popular scheme, which is being run keeping in mind the safe future of daughters. This account can be opened in the name of daughters under 10 years of age. At the same time, you should also know that according to the existing rules of Public Provident Fund (PPF), you can open a PPF account in the name of your minor. Any individual can open a PPF account in the name of his child. Just till the child is 18 years old, the guardian has to look after this account. Both schemes are popular schemes giving better returns in small savings. If you are wondering where there is more benefit then this report can be useful.
PPF
Any individual looking at the future of his child can also open a PPF account in his name. Parents have to take care of the account till the age of 18 years. After 18 years, the child can manage this account himself.
Sukanya Samriddhi Yojana
Account can be opened in any post office or commercial bank under Sukanya Samriddhi Yojana (SSY). Generally, banks which have the facility to open Public Provident Fund (PPF) accounts, also have the facility to open Sukanya Samriddhi Yojana accounts.
Where can you open an account
Both schemes are run by the Post Office. Apart from this, banks which have the facility to open Public Provident Fund (PPF) account also have the facility to open Sukanya Samriddhi Yojana Account (SSY).
Maturity
PPF: The maturity of a PPF account is 15 years, but it can be extended for 5–5 years.
SSY: The maturity of Sukanya Samriddhi Yojana is 21 years, but parents have to invest only 14 years in it.
Rate of interest
PPF: Interest rate on PPF account is being compounded at 7.1% per annum compounding.
SSY: The current interest rate on Sukanya Samriddhi Yojana is being met at the compounding of 7.6 per cent per annum.
Tax rebate
PPF: If you deposit money in PPF account in the name of the child too, then you will also get the benefit of tax exemption under Section 80C of the Income Tax Act. It is a very popular option for long term investment, where both interest and maturity are tax free.
SSY: Tax exemption can be availed under Section 80C of Investment Income Tax Act under Sukanya Samriddhi Yojana.
Minimum and maximum investment
PPF: The minimum and maximum deposit limit in this account is 500 rupees and 1.50 lakhs. But keep in mind that if the PPF account is also opened in the name of the guardian, then the maximum amount limit will be considered by including both accounts. It is not that 1.5 lakhs can be deposited annually in both accounts.
SSY: A minimum of 250 rupees can be deposited annually in Sukanya Samriddhi Yojana. A minimum of Rs 250 and a maximum of Rs 1.50 lakh can be deposited annually under the scheme.
Start adding money for your child’s education right now, so planning will not cost college fees
PPF: Return Calculator
Suppose you have opened a PPF account for the child as soon as it is 1 year old. First its maturity will be 15 years. By then the child will be 16 years old. At the same time, by increasing it to 5 years, the child will be completed 21 years.
For 15 years of maturity
Maximum Monthly Deposit: Rs 12,500
Maximum annual deposit: Rs 1,50,000
Interest Rate: Compounding 7.1% per annum
Amount at maturity after 15 years: Rs 40,68,209
Total Investment: 22,50,000
Interest benefit: Rs 18,18,209
5 more years, that is, 20 years
Total investment: Rs 30,00,000
After 20 years, the amount on maturity: Rs 66.58 lakh
Interest benefit: Rs 36,58,288
SSY: Return Calculator
Annual deposit: Rs 1.50 lakh
Deposited in 14 years: 21 lakhs
Rate of interest: 7.6 percent
This amount will be Rs 37,98,225, according to compounding of 7.6% per annum in 14 years.
Then for 7 years, this amount will yield 7.6 percent annual compounding.
This amount on 21 years i.e. maturity: 63.5 lakh rupees
Interest Gain: Rs 42.5 Lakh
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