Public Provident Fund (PPF) vs Sukanya Samriddhi Yojana: How to get up to Rs 70 lakh, save Income Tax?

Concerned 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. 
Either 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. 

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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. 

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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).