PPF vs FD — The Core Difference

PPF (Public Provident Fund) is a government-backed savings scheme with a 15-year lock-in. FD (Fixed Deposit) is a bank savings product with flexible tenure from 7 days to 10 years. Both are safe — but they serve different financial goals.

Current Interest Rates (2026)

  • PPF: 7.1% per annum (government-set, quarterly revised)
  • Bank FD: 6.5–8.5% depending on bank and tenure
  • Senior Citizen FD: 0.25–0.5% extra

Tax Treatment — The Crucial Difference

  • PPF: EEE status — Investment, interest, and maturity ALL tax-free. ₹1.5L contribution eligible under Section 80C.
  • FD: Interest fully taxable as income. TDS deducted at 10% if interest exceeds ₹40,000/year (₹50,000 for seniors).

Liquidity Comparison

  • PPF: 15-year lock-in. Partial withdrawals from Year 7. Loans against PPF from Year 3.
  • FD: Premature withdrawal available (with penalty of 0.5–1%). Loan up to 90% of FD value.

Who Should Choose What?

  • PPF: Best for long-term tax-free wealth creation. Ideal for salaried individuals maximising 80C. 15-year horizon required.
  • FD: Best for short-to-medium term goals (1–5 years), emergency fund parking, or when liquidity is needed.

Calculate Your Returns

Compare PPF and FD returns with our free PPF & FD Calculator → and decide where your safe money grows most efficiently.