Comparison guide
PPF vs FD — Returns, Tax Treatment & Liquidity Compared
Both PPF and bank FDs are debt instruments — but they sit at opposite ends of the lock-in vs liquidity spectrum.
// returns
PPF: 7.1% p.a. (current notification), fully tax-free under EEE. FD: 6.5–7.5% p.a. across most major banks for a 1–3 year tenor; interest fully taxable at slab rate. Post-tax, PPF wins handily for any investor in the 20% or 30% slab.
// lock-in & liquidity
PPF locks money for 15 years with partial withdrawals only from year 7. Bank FDs are far more flexible — premature withdrawal is allowed with a 0.5–1% interest penalty. If you may need the corpus mid-tenor, FDs win.
// risk
Both are essentially risk-free. PPF is a Government of India sovereign-backed scheme. FDs up to ₹5 lakh are guaranteed by DICGC; amounts above that depend on the bank's solvency.
// frequently asked questions
No — they serve different purposes. Use PPF for long-term tax-efficient retirement saving (up to ₹1.5 lakh/year) and FDs for short-to-medium emergency reserves you might actually need.