SSY vs PPF for Girl Child Savings: 8.2% vs 7.1% Rate and the Lock-In Trade-Off

A girl child's first big savings decision in 2026 is rarely about ELSS units or NIFTY 50 returns — it is about a choice between two government-backed lockboxes: the Sukanya Samriddhi Yojana (SSY) and the Public Provident Fund (PPF). The rate gap is now meaningful. The Ministry of Finance has notified SSY at 8.20 per cent and PPF at 7.10 per cent for the current quarter, a 110 basis-point premium that compounds for two decades. Both schemes are EEE (Exempt-Exempt-Exempt) under the old tax regime and both cap deposits at Rs 1,50,000 a year. The differences sit in eligibility, lock-in, withdrawal flexibility and what your daughter will actually need money for at age 18 versus age 60. This piece walks through the maths, the statutory differences, and the practical question every parent asks: if I can fund only one fully, which one earns more after tax — and which one is easier to draw down when fee deadlines hit?

Side-by-Side Comparison

The two schemes look similar on the cover — sovereign backing, annual compounding, identical 80C eligibility, identical Rs 1.5 lakh annual cap. The differences emerge once you read the fine print of the Sukanya Samriddhi Account Rules, 2016 (now amended) and the Public Provident Fund Scheme, 2019, both notified under the Government Savings Promotion Act, 1873.

The 110 basis-point rate gap is the headline, but the second-order numbers matter as much. SSY locks the principal for 21 years from the date of opening — for a daughter aged 1, the account matures when she is 22; for a daughter aged 9, it matures at 30. PPF, by contrast, gives a clean 15-year tenure with the option to extend in five-year blocks, with or without fresh contributions, with no upper age constraint at all. Liquidity in PPF starts kicking in from year 7 with partial withdrawals; SSY does not allow any withdrawal until the girl turns 18, and even then is capped at 50 per cent of the balance at the end of the previous financial year.

The eligibility rule is the single hardest filter. SSY is only for a girl child below the age of ten, with a maximum of two accounts per family — the third account is allowed only if the second birth is a twin or triplet. PPF has no age, gender or family count restriction. A father can hold a PPF in his own name, operate his daughter's PPF as guardian, and operate his daughter's SSY as guardian, all in parallel. He cannot, however, deposit more than Rs 1,50,000 across his own PPF and any minor account he operates in a single financial year — the cap is on the assessee, not on the account.

Tax Treatment

Both schemes are EEE, and that is unusual: it means the deposit, the interest credited each year, and the maturity proceeds are all exempt from income tax. Very few instruments still carry that status after the Finance Act 2023 stripped indexation from debt mutual funds and the Finance Act 2024 brought the long-term capital gains rate on equity and property to 12.5 per cent. SSY and PPF survived both rounds of tightening untouched.

The exempt-deposit leg is conditional. Section 80C, which gives the upfront deduction of up to Rs 1,50,000, is only available in the old tax regime. Under the new regime — the default since FY 2023-24 and now the headline regime under Section 115BAC — there is no Section 80C deduction. So a parent in the new regime puts in Rs 1,50,000 of post-tax money, but the interest and maturity remain tax-free. A parent in the old regime puts in Rs 1,50,000 of pre-tax money — at the 30 per cent marginal slab plus 4 per cent cess, that is a Rs 46,800 tax saving up front.

Section 10(11) covers PPF and Section 10(11A) covers SSY. Both exemptions apply regardless of which tax regime you elect — the regime choice only affects the deposit-stage Section 80C benefit, not the interest or maturity stages. So a high-income parent in the new regime can still treat both schemes as tax-free debt at 8.20 per cent and 7.10 per cent respectively, which is roughly equivalent to a pre-tax fixed deposit at 11.71 per cent (SSY) and 10.14 per cent (PPF) for someone in the 30 per cent slab.

The Section 87A rebate of up to Rs 60,000 in the new regime — applicable up to a total income of Rs 12,00,000 — does not interact with SSY or PPF directly. But for a single-income household where the parent's taxable income is in the rebate band, the upfront 80C value of either scheme is zero in either regime; only the interest yield matters. That tilts the case heavily toward SSY at the higher rate.

Who Should Pick Which

The right answer is rarely "either-or" — it is "in what order, with what allocation". Five common parent profiles capture most of the practical decisions.

Parents of a daughter under 10, single-income, in the old regime. The first Rs 1,50,000 of annual savings should go into SSY. The 8.20 per cent rate is the highest tax-free yield available under any small savings scheme today and the EEE structure compounds without leakage. Use our PPF calculator with the SSY rate to model the corpus — at Rs 1,50,000 a year for 15 years at 8.20 per cent, the year-15 balance is roughly Rs 41.49 lakh. Held untouched for the remaining six years of the 21-year tenure, the corpus compounds to roughly Rs 66.61 lakh, all tax-free. PPF should follow only if there is room beyond the SSY contribution — otherwise it sits behind SSY in the queue.

Parents of a daughter under 10, dual-income, both in the new regime. Both spouses should each open a PPF in their own name to lock in tax-free debt allocation, and one parent should operate the daughter's SSY as guardian. The new regime takes away the upfront 80C deduction, but it does not touch the EEE interest exemption. SSY at 8.20 per cent post-tax is equivalent to approximately 11.71 per cent pre-tax for a 30 per cent slab earner — no comparable AAA debt instrument matches that combination of safety and yield.

Parents who already maxed out PPF for years and now have a daughter. This is the trickiest case. SSY needs the daughter to be below 10 at account opening, so timing is binding. Open SSY first with the minimum Rs 250 to lock in the eligibility window, then redirect annual contributions from PPF to SSY. Existing PPF balances continue to compound at 7.10 per cent and can be left to mature.

Parents who need money around year 7-10 for school or coaching. PPF wins. Partial withdrawals are allowed from the seventh financial year onwards (up to 50 per cent of the balance at the end of the fourth preceding year), and a loan against PPF is available between the third and sixth year. SSY allows zero withdrawals until the girl turns 18. If the household has variable income or anticipates a liquidity squeeze around the daughter's school years, PPF's lower rate is worth the optionality.

Parents whose daughter is heading to college at 18. SSY's partial withdrawal at 18 — up to 50 per cent of the prior-year balance, for higher education or marriage — is purpose-built for this. The rule recognises receipts and admission letters as proof of higher education and the withdrawal can be taken in lump sum or in five annual instalments. For a daughter who turns 18 in 2032 with a corpus of Rs 30 lakh, that is up to Rs 15 lakh available for college fees without breaking the account.

For families that have headroom beyond Rs 1.5 lakh a year, an equity SIP layer alongside SSY is worth modelling — the long horizon of a girl-child goal absorbs equity volatility well, and AMFI-published total-return benchmark indices have historically delivered around 12 per cent over rolling 15-year windows. That allocation question is covered in detail in our PPF vs ELSS vs NPS comparison. For parents leaning toward debt-only, the post-tax math against debt mutual funds is also worth a look — both PPF and SSY have widened their advantage since the Finance Act 2023 removed indexation. An ELSS allocation can sit alongside SSY for parents using the old regime, since the Section 80C basket of Rs 1,50,000 is shared.

The maturity-stage comparison summarises the case. The table below assumes Rs 1,50,000 contributed every year, end-of-year, with rates held constant at the current notified levels — an illustrative simplification, since rates reset quarterly.

The Rs 9.26 lakh differential at year 21 is on a total deposit of Rs 22.50 lakh in SSY (15 contribution years) versus Rs 31.50 lakh in PPF (21 contribution years) — SSY produces more corpus from less principal because of the rate edge and the post-deposit compounding. The catch is that those numbers assume rates stay at 8.20 per cent and 7.10 per cent — which they will not. Both rates have moved in 25 to 50 basis-point steps in past quarters, and the historical SSY band of 7.60 to 8.60 per cent suggests realistic outcomes within a Rs 5 lakh range of the headline figures. Run your own numbers in the PPF calculator and re-run them when each quarterly notification arrives.

FAQ

Can I open both SSY and PPF for the same girl child?

Yes. SSY is opened in the daughter's name with a parent or legal guardian as operator, while a PPF account can be opened separately by the parent in their own name or as guardian for the minor. Combined deposits across the parent's own PPF and any minor PPF they operate are still capped at the Section 80C limit of Rs 1,50,000 per financial year.

Does the SSY rate of 8.20 per cent stay fixed for the full 21-year tenure?

No. The Ministry of Finance notifies SSY and PPF rates every quarter. The 8.20 per cent figure is the rate for the current quarter only, and the historical band has been 7.60 to 8.60 per cent since the scheme launched in 2015. Returns shown in any compounding projection are illustrative, not guaranteed.

Is SSY interest taxable under the new tax regime?

No. The interest exemption under Section 10(11A) and the maturity exemption are statutory and apply regardless of which regime you choose. Only the upfront Section 80C deduction is unavailable in the new regime — that affects the deposit-stage benefit, not the interest or maturity stage.

What happens to the SSY account if the girl turns 18 before 21 years?

The account continues to earn interest until the 21st year from opening. The account holder can withdraw up to 50 per cent of the balance after turning 18 for higher education or marriage. Full closure before 21 years is permitted only on marriage at or after 18, on death, or on specified medical grounds after five years.

Can I deposit more than Rs 1,50,000 in SSY in a year if I missed earlier years?

No. The Rs 1,50,000 ceiling applies to the financial year, not to cumulative deposits. Excess amounts are returned without interest. To re-activate a defaulted SSY account, the minimum Rs 250 plus a Rs 50 penalty per year of default must be paid.

Is PPF still worth holding after the 15-year maturity?

Yes, in two ways. You can extend in five-year blocks with fresh contributions and retain the EEE status, or you can extend without contributions and let the corpus continue to compound at the prevailing rate. There is no compulsion to withdraw at year 15, and the extension request must be filed in writing within one year of maturity to keep contributions eligible.

If I switched to the new tax regime, should I still fund SSY or PPF?

Yes for SSY if you have a daughter under 10 — the 8.20 per cent tax-free yield is hard to beat in any debt instrument under the new regime. PPF still works as a tax-free debt allocation; without the 80C deduction the case is weaker, but the EEE interest and maturity treatment still beats most taxable fixed deposits for a high earner.