PPF vs FD: Key Differences Explained
Compare Public Provident Fund and Fixed Deposits based on interest, tax, tenure, and flexibility.
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Quick Comparison: PPF vs FD
| Factor | PPF | Fixed Deposit (FD) |
|---|---|---|
| Interest Rate | 7.1% (government fixed) | 5.5% – 7.5% (bank dependent) |
| Tenure | 15 years (extendable) | 7 days to 10 years |
| Tax Benefit | EEE (Tax-free on maturity) | Interest taxable, 80C on deposit |
| Risk | Zero (Backed by government) | Low (Bank deposit insurance) |
| Liquidity | Partial withdrawal after 7 years | Premature withdrawal allowed (penalty applies) |
When to Choose PPF?
PPF is ideal for long-term investors seeking:
- Guaranteed tax-free returns
- Safe retirement planning
- Full EEE tax exemption
When to Choose FD?
Fixed Deposits suit short- to medium-term goals where:
- Flexibility in tenure is required
- You want regular income via monthly interest
- Low-risk savings for short-term goals
Final Verdict
If you are planning long-term tax-free wealth creation, PPF wins. If you prefer flexibility, easy access, and short tenure, FD is better.