When it comes to long-term savings and investment plans, PPF (Public Provident Fund) and NSC (National Savings Certificate) have been the go-to choices for many. However, there's a better alternative offering higher returns—the Sukanya Samriddhi Yojana (SSY). Specifically designed for the future of your daughter, this scheme not only promises attractive interest rates but also provides substantial tax savings.
Let’s explore how SSY stands out from other savings schemes and how you can benefit from it!
1. What is sukanya Samriddhi Yojana (SSY)?
The Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme introduced in 2015 under the Beti Bachao Beti Padhao initiative. It aims to secure the future education and marriage expenses of a girl child.
· Target Audience: parents or legal guardians of a girl child who is below the age of 10.
· Minimum Deposit: ₹250 per year.
· Maximum Deposit: ₹1.5 lakh per year (you can deposit in lump sum or in installments).
2. Higher Interest Rates than PPF and NSC
One of the key attractions of SSY is its interest rate, which consistently exceeds that of popular schemes like PPF and NSC:
· SSY Interest Rate: 7.6% per annum (compound interest)
· PPF Interest Rate: 7.1% per annum
· NSC Interest Rate: 6.8% per annum
With 7.6% compounded annually, the returns on your investment in SSY can grow at a faster pace, especially when you're investing over the long term.
3. Tax Benefits under Section 80C
Not only does SSY offer attractive interest rates, but it also comes with tax-saving benefits:
· Tax Deduction: Contributions made to SSY are eligible for tax deduction under Section 80C of the Income Tax Act, up to ₹1.5 lakh per annum.
· Tax-Free Interest: The interest earned and the amount withdrawn at maturity are tax-free, which is a huge benefit over other taxable income sources.
This makes SSY a double whammy for investors: you get higher returns, and it helps reduce your overall taxable income.
4. Flexible Tenure and Withdrawals
Unlike other schemes that have a rigid structure, SSY offers flexibility when it comes to tenure and withdrawals:
· Deposit Tenure: You can invest in SSY for a maximum of 15 years from the date of account opening.
· Partial Withdrawal: You can withdraw up to 50% of the balance for the girl’s higher education after she turns 18. However, this is subject to certain conditions.
· Maturity: After 21 years from the date of opening the account, you can close the account and claim the matured amount.
This gives you a structured yet flexible way to ensure that the savings are used for critical life stages.
5. SSY is Safe and Government-Backed
Another major advantage of SSY over other savings schemes is that it’s backed by the government of India, which makes it extremely safe. The risk factor is minimal because it’s not affected by market fluctuations, unlike equity-linked products.
· Zero Risk: No market risk; guaranteed returns.
· Government Assurance: Your investment is secured by the government.
This makes it a great option for conservative investors looking for guaranteed returns with minimal risk.
6. How SSY Helps You Accumulate Lakhs
Now, let’s see how SSY can help you accumulate a significant corpus:
Example 1: Small Monthly Deposits for a Big Future
· If you deposit just ₹1,000 per month for 15 years, you could accumulate over ₹3.25 lakh (principal and interest) at an interest rate of 7.6%.
Example 2: Higher Deposits for Maximum Growth
· If you choose to deposit the maximum limit of ₹1.5 lakh per year, over 15 years, at the same 7.6% interest rate, you could accumulate a substantial amount of ₹49 lakh+ (depending on interest compounding).
Thus, even modest monthly contributions can lead to a handsome corpus over time, which will be tax-free at the time of maturity.
7. Key Advantages of SSY Over Other Schemes
Here’s why SSY stands out compared to other schemes like PPF, NSC, and FDs:
Feature
Sukanya Samriddhi Yojana (SSY)
PPF
NSC
FDs
Interest Rate
7.6% p.a. compounded
7.1% p.a.
6.8% p.a.
3-7% p.a.
Tax Deduction (80C)
Yes, up to ₹1.5 lakh
Yes, up to ₹1.5 lakh
Yes, up to ₹1.5 lakh
No
Tax-Free Interest
Yes
Yes
No
No
Risk
Low (Government backed)
Low
Low
Varies
Deposit Tenure
15 years minimum, 21 years total
15 years
5-6 years
Varies
Partial Withdrawal
After 18 years, for education
No
No
No
8. How to Open an SSY Account?
Opening an SSY account is simple and straightforward:
1. Visit a Post office or Bank: You can open the SSY account at any post office or authorized banks (like SBI, PNB, ICICI, etc.).
2. Documents Required:
o Birth Certificate of the girl Child
o Parent’s ID proof (Aadhaar card, voter ID, etc.)
o Filled application Form
3. Minimum Investment: ₹250 (annually)
4. Account Type: Individual accounts in the name of the girl child.
9. Conclusion: A Must-Consider Savings Plan
The Sukanya Samriddhi Yojana is more lucrative than traditional schemes like PPF and NSC for those looking to secure the future of their daughter. With its high interest rates, tax-saving benefits, and government backing, SSY is a perfect choice for parents who want to accumulate a significant corpus for their child’s education and marriage.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk..jpg)
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