Sukanya Samriddhi Yojana (SSY) vs Fixed Deposits (FDs): Which Is Better for Your Girl Child?

With the rising cost of education and weddings, Indian parents are seeking secure investments to build a financial corpus for their daughters. Parents have two popular investment options: Sukanya Samriddhi Yojana (SSY) and Fixed Deposits (FDs).

Let’s compare both investment options so you can make informed investment decisions for your daughter.

What is the Sukanya Samriddhi Yojana?

Sukanya Samriddhi Yojana (SSY) is a government savings scheme that has been designed to enable parents to save for their girl child's financial future through investments. The parents can invest in SSY schemes to ensure that funds will be available for her higher education or marriage.

You can open a Sukanya Samriddhi Yojana account easily by visiting the nearest post office or a commercial bank authorised by the government. Simply fill out the Sukanya Samriddhi Yojana form and submit all the required documentation, including the birth certificate of the girl child, identity proof, and address proofs of the parents, to open the SSY account for your daughter.

What is a Fixed Deposit (FD)?

A Fixed Deposit (FD) is a safe and simple investment plan in which a lump sum amount of money is deposited with a bank or financial institution for a certain period of time, with fixed returns up until the maturity period. The depositor can choose to receive interest payouts periodically or opt for compounded returns, where the interest is reinvested and paid along with the principal amount at maturity.

Difference Between Sukanya Samriddhi Yojana and Fixed Deposit

The following are the key differences between Sukanya Samriddhi Yojana and Fixed Deposit investments.

Eligibility Criteria

The Sukanya Samriddhi Yojana is designed exclusively for girl children and can be opened by parents or guardians of a girl below 10 years of age.

Anyone above the age of 18 can open a Fixed Deposit for themselves or on behalf of a minor.

Interest Rate

The Central Government of India sets and revises the interest rate on SSY every quarter. As of June 2026, the interest rate of Sukanya Samriddhi Yojana (SSY) is 8.2%.

Unlike SSY, the interest rate on FDs is fixed by the bank or the financial institution and remains the same throughout the investment period.

Minimum and Maximum Investments

To invest in the Sukanya Samriddhi Yojana, you need a minimum investment of ₹250 and can invest up to ₹1.5 lakh in a single financial year.

The minimum limits on FD investment are fixed by the respective banks and financial institutions, and there is no maximum investment limit.

Lock-in Period

When you invest in SSY, your funds are locked in for 21 years from the date of opening the Sukanya Samriddhi Yojana account or until the girl reaches 18 years of age and is about to get married, whichever is earlier.

Most banks offer a flexible lock-in period for FDs. It typically ranges from 7 days up to 10 years based on your investment scheme.

Tax Benefit

Under Section 123 of the Income Tax Act 2025, investment in SSY receives an exemption of up to ₹1.5 lakh per year. The entire income from SSY will be exempt because it comes under the EEE category of taxation. This includes both the interest and the maturity value of your investments at the time of maturity.

Only savings FDs can receive exemptions under Section 123 of the Income Tax Act, 2025, and the income from interest is taxable according to your tax slab rate.

Premature Withdrawal

For an SSY account, you can partially withdraw up to 50% of the corpus after the child turns 18 to cover higher education and marriage expenses. You can choose to close your SSY account after 5 years only if the guardian passes or has a life-threatening illness.

Most banks and financial institutions allow premature withdrawals for FDs; however, you may have to pay a nominal amount as a penalty. The penalty for partial withdrawal depends on the bank or the institution.

FAQs

Is SSY better than FD?

SSY is definitely better when it comes to saving for a girl child due to higher interest rates and tax benefits. FDs will be a better option if you seek easy liquidity for your investment.

Is SSY more profitable than FD?

Yes, SSY offers a higher interest rate compared to most FDs provided by Banks, hence earning better over time

Is SSY safer than FD?

They are both safe investments, FD being provided by the Bank and SSY guaranteed by the Government of India.

SSY vs FD: Which one is more Tax Effective?

SSY provides greater tax benefits compared to FDs. The existing laws provide that investment in SSY is tax-free. The interest income on FDs is taxable.

Can we withdraw from SSY & FDs before maturity?

Early withdrawals are allowed in FDs at a fee. SSY accounts are for long-term savings, with few exceptions for withdrawal.