Sukanya Samriddhi Account vs Recurring Deposits

Sukanya Samriddhi Yojana is a long term investing instrument with double benefits – better returns for girls’ future and tax-saving benefits for her parents. 

I am going to compare SSY with Recurring Deposits (RDs) in a tabular form. This will give you more clarity that why SSY is better than RD. Reason of choosing RD in comparison with SSY is because most people in India prefer  RDs or FDs over other methods

How Sukanya Samriddhi Yojana is better than Recurring Deposits?

Parameters

Sukanya Samriddhi Yojana

Recurring Deposits

Eligibility A girl child below 10 years in age Any person (for minor by parents)
Where to Open Post offices and authorized banks Post Offices and Banks
Number of Accounts One account per girl child No Limit
Purpose For girl child’s higher education and marriage For short term goals like an annual vacation, child’s hostel fees or any upcoming event.
Nature Long-Term Debt Scheme Short-Term Debt Scheme
Minimum Investment Rs. 250 per year Rs.100 per month
Maximum Investment Rs.1.50 lakh per year No limit
Penalty for default in paying the contribution Rs.50 per year Rs.1.50 to Rs.2 for every Rs.100 per month
Minimum Tenure Fixed Tenure of 21 years. 6 months
Maximum Tenure 10 years
Interest Rate 8.4% p.a. 7.6% p.a. for 1 to 5 years RD.
Interest Calculation Compounded Yearly Compounded Quarterly
Tax Benefits on Deposits Exempted u/s 80C of Income Tax Not Deductible
Tax Benefits on Interest Tax-Free Taxable.

If the account belongs to a minor then parents can claim a deduction of Rs.1,500 from the total interest u/s 10(32).

Tax Benefits on Maturity Amount Tax-Free Fully Taxable with no exemption.
Loans No loan can be taken on the SSA balance Up to 90% of the available balance
TDS Applicability No TDS is to be deducted from the Interest Income. TDS is to be deducted from the Interest Income.
Premature Withdrawal One time when the girl child turns 18.

50%  amount can be withdrawn.

1% penalty

Final Words

You can easily see the benefits of Sukanya Samriddhi Yojana over Recurring deposits. If you want to save money for your daughter’s future but can’t invest in risk-oriented assets than Sukanya Samriddhi Yojana is the best option for you to save money.

Comments (29)

  1. Syed Oct 7, 2018
    • dev singh May 18, 2019
  2. sreedhar balusani May 13, 2015
    • Dev Singh May 18, 2019
  3. manilal aheibam Apr 19, 2015
    • manilal aheibam Apr 19, 2015
      • Dev Singh May 18, 2019
  4. royan Apr 7, 2015
    • Sanyam Apr 13, 2015
  5. sk Mar 31, 2015
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  8. Nisha Sahaay Mar 19, 2015
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  9. pravin singh Mar 6, 2015
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  15. santosh agrawal. Feb 24, 2015
  16. ritesh agrawal Feb 23, 2015
    • Sanyam Feb 23, 2015

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