Which investment scheme should you pick for your girl child?
PPF has always been the go-to investment option under Section 80C when taxpayers wish to save taxes. Investment made is PPF can be claimed as a deduction under Section 80C, which reduces your taxable income.
The maximum deduction allowed is Rs.1,50,000.
To max out the full limit, it’s also quite common to open PPF accounts on your children’s name. But with the newly-introduced scheme Sukanya Samridhi, it would be wise to choose Sukanya Samridhi Scheme over PPF for your daughter.
Sukanaya Samridhi has been made completely tax-free this Budget, just like PPF. This means that investment is allowed as a deduction, interest earned is exempt from tax and you are not taxed at the time of withdrawal.
So which investment should you prefer for your daughter? Let’s compare the two.
| Public Provident Fund | Sukanya Samridhi Scheme | |
| How to open the account? | No such limitations apply. | An account can be opened for a girl child up to 10 years of age from the date of birth. |
| Duration money is locked in | 15 years(Partial withdrawal allowed after the 7th year) | Investment locked in till the girl turns 21(Partial withdrawal allowed when she is 18 years old) |
| Rate of return | 8.7% for FY 2014-15(Interest rate revised periodically) | 9.1% for FY 2014-15(Interest rate revised periodically) |
| Minimum investment required every year | Rs.500 | Rs.1,000 |
With the same benefits as a PPF account and higher returns, Sukanya Samridhi scores over PPF for your girl child.
Sukanya Samridhi Accounts can be opened from post offices across India.