PPF vs. SSA: A Comparison of Popular Government Savings Schemes in India

Introduction:

Public Provident Fund (PPF) and Sukanya Samriddhi Account (SSA) are two prominent savings schemes introduced by the Government of India. While both aim to encourage savings and offer tax benefits, they cater to different demographics and have distinct features. This article provides a comprehensive comparison of PPF and SSA, highlighting their eligibility criteria, interest rates, benefits, and withdrawal options.

Eligibility:

PPF: PPF is open to all Indian residents, including minors. It can be opened by individuals, irrespective of gender or age.

SSA: SSA is specifically designed for the long-term savings of the girl child. It can only be opened by parents or legal guardians in the name of a girl child below the age of 10.

Purpose: 

PPF: PPF is a general-purpose savings scheme that helps individuals build a corpus for various financial goals like retirement, education, or emergencies.

SSA: SSA aims to secure the future education and marriage expenses of the girl child, promoting her welfare and empowerment.

Account Limit:

PPF: The minimum investment limit for PPF is Rs. 500 per year, while the maximum limit is Rs. 1.5 lakh per year.

SSA: The minimum deposit requirement for SSA is Rs. 250 per year, and the maximum limit is also Rs. 1.5 lakh per year.

Duration:

PPF: PPF has a lock-in period of 15 years, which can be extended in blocks of 5 years. 

SSA: SSA has a lock-in period of 21 years or until the girl child gets married after attaining the age of 18.

Interest Rates:

PPF: The interest rate on PPF is currently 7.1% per annum (as of April 2023), compounded annually. The rates are reviewed quarterly by the government.

SSA: The interest rate for SSA is also determined by the Ministry of Finance and is typically higher than inflation, currently standing at 8.0% per annum.

Tax Benefits:

PPF: Contributions to PPF are eligible for deduction under Section 80C of the Income Tax Act, and the interest earned and maturity amount are tax-exempt.

SSA: Similar to PPF, contributions to SSA qualify for a deduction under Section 80C, and the interest earned and maturity amount are tax-free.

Withdrawal Options:

PPF: Partial withdrawals are allowed from the 7th financial year, subject to certain conditions. The amount withdrawn is limited to a specified percentage of the balance. 

SSA: Partial withdrawals up to 50% of the balance can be made from the SSA account once the girl child reaches the age of 18 for her higher education needs.

Conclusion:

PPF and SSA are two distinct savings schemes offered by the Government of India. PPF provides a general savings avenue for individuals, while SSA specifically targets the financial security of the girl child. PPF has a shorter lock-in period, broader eligibility, and flexibility in withdrawal options. On the other hand, SSA offers a higher interest rate, tax benefits, and aims to empower the girl child. Individuals should carefully consider their financial goals, eligibility, and preferences before choosing between PPF and SSA.