PPF vs Fixed Deposit (FD): Complete Comparison 2026
A detailed comparison of PPF and Fixed Deposits covering interest rates, tax treatment, liquidity, risk, and which is better for different investor profiles in 2026.
PPF vs FD: The Quick Answer
If you're in the 20% or 30% tax bracket and can commit money for 15 years, PPF wins. If you need short-term parking or are in a low tax bracket, FDs have their place. But let's get into the details.
Interest Rates: 2026 Numbers
| Feature | PPF | FD (Major Banks) |
|---|---|---|
| Interest Rate | 7.1% fixed by government | 7.0-7.5% (varies by bank and tenure) |
| Compounding | Annual | Quarterly (most banks) |
| Rate Guarantee | Government-set, can change quarterly | Fixed for the FD tenure |
On the surface, FDs offer a comparable or slightly higher rate. Some small finance banks even offer 8-8.5% on FDs. But the headline rate is misleading because of taxes.
The Tax Reality
This is where PPF pulls away decisively.
**PPF (EEE - Exempt Exempt Exempt):**
**FD (ETE - Exempt Taxable Exempt for tax-saver FDs):**
**After-tax FD returns by bracket:**
So for someone in the 30% bracket, PPF at 7.1% beats an FD at 7.0% by more than 2 percentage points after tax. Over 15 years, that's a massive difference.
Real Numbers: Rs 1,50,000/Year for 15 Years
| Metric | PPF at 7.1% | FD at 7.0% (30% bracket) |
|---|---|---|
| Total Deposited | Rs 22,50,000 | Rs 22,50,000 |
| Maturity Amount | Rs 40,68,209 | ~Rs 33,60,000 |
| Interest Earned | Rs 18,18,209 | ~Rs 11,10,000 |
| Tax Paid | Rs 0 | ~Rs 4,76,000 |
| Net in Hand | Rs 40,68,209 | ~Rs 33,60,000 |
PPF gives you Rs 7 lakh more. That's not a rounding error. That's a car.
Liquidity Comparison
This is FDs' biggest advantage.
**PPF Liquidity:**
**FD Liquidity:**
If you might need the money within 5 years, FDs are clearly more practical.
Risk Comparison
**PPF**: Sovereign guarantee from Government of India. Zero risk of principal loss. Unlimited protection.
**FD**: DICGC insurance covers up to Rs 5 lakh per depositor per bank. If you have Rs 20 lakh in FDs at one bank and the bank fails, you only get Rs 5 lakh back. Spread FDs across banks if you have large amounts.
Senior Citizen Consideration
Banks offer 0.25-0.5% extra interest on FDs for senior citizens. Combined with the Rs 50,000 interest exemption under Section 80TTB, senior citizen FDs become quite competitive:
For seniors who need regular interest income (which PPF doesn't provide monthly), FDs with monthly interest payout make more sense.
The Verdict
**Choose PPF if:**
**Choose FD if:**
**Best approach:** Max out PPF first (Rs 1,50,000/year), then use FDs for anything beyond that or for short-term needs.
Calculate your PPF growth with our [PPF calculator](/) and compare with compound growth scenarios using the [Compound Interest Calculator](https://compound-calc-8c8.pages.dev).