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
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How Sukanya Samriddhi Yojana is better than Recurring Deposits?
Sukanya Samriddhi Yojana
|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50% amount can be withdrawn.
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.