The Government of India recently hiked interest rates on small savings schemes including the Public Provident Fund and the Sukanya Samriddhi Yojana.

Public Provident Fund (PPF) vs Sukanya Samriddhi Yojana (SSY): Gift your child up to Rs 70 lakh, save Income Tax!

Image result for save tax indiaConcerned about the financial future of your children? Here are two government-backed schemes that can make your newly born son or daughter never have to worry about money when they grow up. Moreover, the schemes - Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY) - come with income tax benefits that will contribute to your own financial health. While both plans come with higher interest rates compared to most of the Fixed Deposit rates offered by banks, there are also certain differences: 

SSY account can be opened only in the name of a girl child aged 1-10 years. PPF can be opened by a person in his/her own name or on behalf of a minor of whom they are the guardians.

Image result for calculatingEither father or mother can open the PPF account on behalf of a minor. As per rules, both the parents cannot open a separate account for the same minor. As per the rules a PPF account on behalf of a minor cannot be opened by grandparents. They can do so only if they are appointed as legal guardian after the death of the parents.
At present PPF interest rate is 8.10 per cent, while on SSY deposit, one can get 8.5 per cent interest rate.

There is a lock-in period of 15 years on PPF deposits, which can be made on a yearly, quarterly, monthly or half-yearly basis. The account can be extended further. In SSY, the deposit needs to be made for 14 years, while the account matures at 21.

In PPF, one can make the minimum investment of Rs 500/year. The maximum limit is Rs 1.5 lakh/year. The maximum limit is same for SSY account, however the minimum limit is as low as Rs 250/year. 
The government of India recently hiked interest rates on small savings schemes including the PPF and the SSY. The interest rates on small savings schemes are revised by the government on a quarterly basis.
How much you can save for your kid's bright future:
At the current rate of interest of 8.5% (provided it remains same), the deposit of Rs 1.5 lakh can return around Rs 70 lakh when she turns 21. For all the 14 years of investment, you will also get income tax benefits. 

By investing Rs 1.5 lakh/year in the PPF, you will be able to gift around Rs 46 lakh after 15 years to your kid (As per the current rate of 8.1 per cent interest rate)

Comments

Post a Comment

Popular posts from this blog

*Who is Modi?* commented by *New York Times Editor-in-Chief Joseph Hope

Image
Prime Minister of India Narendra Modi " The rise of this man is a threat to the world, as he has not only made enemies of each other's interests in India but also used them.  It only shows the desire to make India a great country.  His sole aim is to make India supreme.  If this person is not blocked, then one day in future India will become a powerful nation around the world and it will surprise the United States. He goes through a specific strategy and no one knows what he wants to do.  A dangerous patriot is hidden behind his smiling face.  He uses all the countries of the world for the benefit of India.    By destroying the US relationship with Pakistan and Afghanistan, and forming alliances with enemies like Vietnam, Modi will see the use of the three countries against China.    Vietnam began producing oil in China's southern seaboard, where it supplies all its oil to India, and the Indian company forced Reliance to wor...
Read more

Central Government Schemes

Image
Central Government Schemes PM-KISAN Scheme (Pradhan Mantri Kisan Samman Nidhi)   Main purpose: This scheme promises to pay all poor farmers (small and marginal farmers having lands up to 2 hectares) Rs. 6,000 each year in 3 installments through Direct Bank Transfer. It would reportedly benefit around 14.5 crore farmers in India. Pradhan Mantri Kisan Pension Yojana: Main purpose: To address the problems of farm sector distress, the Modi 2.0 Cabinet has approved a proposal to provide small and marginal farmers with a minimum Rs 3,000 per month fixed pension, costing Rs 10,774.5 crore per annum to the exchequer. The eligible farmers around the 18-40 years age bracket can participate during this voluntary and contributory pension scheme. Once the beneficiary of the pension dies, the spouse will be entitled to receive 50% of the original beneficiary's pension amount. Mega Pension Scheme:  Main purpose: A Mega Pension Scheme has been approved for the traders, sho...
Read more