Fixed Deposit vs PPF: Which is Better?

Fixed Deposit

An FD is a financial instrument provided by banks &  financial institutions, allowing investors to deposit a lump sum for a predetermined period, usually months to years.

PPF is a long-term investment scheme backed by the govt. offering fixed returns.

Public Provident Fund


The tenure of FD ranges from a few days to years, whereas for PPF, the lock-in is 15 years.

Interest Rate

The FD interest rate is 4-8%, and the PPF interest rate is fixed at 7.1%.

There is very little to no risk in both PPF and FD. Additionally, FDs are insured up to Rs. 5 lakhs by the DICGC.



The liquidity in FDs is high with applicable penalties. On the other hand, there is limited liquidity available for PPF.

The interest from FD is fully taxable, whereas PPF falls under the EEE category and is entirely tax-free.

Tax Benefits

Deposit Limits

You can deposit in FD from Rs. 100 to any amount. For PPF, the investment limit is Rs. 500 to Rs. 1.5 lakhs.

FD vs PPF: What Should You Pick?

For preserving & growing a lump sum, opt for an FD. PPF, in contrast, is a gradual investment scheme, allowing incremental investments for substantial long-term accumulation.