How is Sukanya Samriddhi Yojana (SSY) different from Tax Saving Fixed Deposit (FD)?
Here are the 9 parameters on the basis of which we can spot out difference between SSY and FD:
- Eligibility of Account holder:
SSY: Sukanya Samriddhi Yojana is specified for only girl child.
F.D.: Fixed deposit account can be opened by any citizen of India i.e. any gender.
- Age limit:
SSY: 10 years or below girl child is eligible for Sukanya Samriddhi Account.
F.D.: For fixed deposit, there is no limit of age.
- Volume of Investment:
SSY: You can invest amount between INR 1000 to INR 1, 50, 000/- per year and all installment amount must be multiples of 100/- for Sukanya Account and if you will be unable to pay minimum amount INR 1000 during one financial year then your SSY account will be discontinued and you have to pay INR 50 penalty with minimum amount to continue the SSA. If you are unable to pay minimum amount per year, then you can close you SSA.
F.D.: You can invest between INR 100/- and INR 1, 50, 000/- per annum and amount should be multiples of 100/-.
- Investment and maturity period
SSY: You have to deposit up to 14 years and rest 7 years will be grace period and interest will be credited and the Sukanya Account will be matured in 21 years from Account opening date. The Account can be extended after 21 years also if the girl wish to do marriage later and the interest will be continuously paid by Govt. up to closing of Account.
F.D.: You can deposit the amount once only during opening of F.D. Account and the F.D. Account will be matured after 5 years from opening of the F.D. Account. No Extension is available.
- Interest calculation
SSY: For Sukanya scheme currently rate of interest is 9.2% in F.Y. 2015-16 and in F.Y. 2014-15 it was 9.1%. The Sukanya Account is linked up to 10 years Govt. Bond Yield and the rate of interest is 0.75% higher than Govt. Bond yield.
F.D.: All banks are having separate interest scheme for Tax saving F.D. account. For example: SBI is providing 8.5% interest for F.D. Account.
- Loan facility:
Loan is not allowed for both accounts.
- Premature withdrawal Rule and Closing Terms & Condition:
SSY: 50% premature can be withdrawn for higher education purpose when girl child will attain 18 age or more. The Accounts can be closed before 21 years maturity period in two conditions: one is, if the girl will marry after 18 age and before maturity of SSY Account and another condition is, if the girl will be dead or the parents are unable to pay minimum amount per year for SSY account, then the account will be closed and the deposited amount and interest will be paid to depositor.
F.D.: Premature amount paying is not allowed and F.D. account will be closed before maturity only on death of the account holder.
- Operation organization:
SSY: Sukanya Account can be deposited on both Post office and Bank.
F.D.: F.D. Account can be deposited on Banks only and can be managed by online also.
- Income Tax exemption u/s 80C.
SSY: All deposited amount and interest and withdrawal amounts are completely exempted from Income Tax exemption u/s 80C
F.D.: The F.D. Deposited amount is exempted from Tax but TDS on interest will be deducted as per section 194A or section 195.
So if one is not concerned about liquidity Sukanya Samriddhi Scheme yields much better returns than Tax Saving Fixed Deposits.