Which is better- PPF vs FD?

The following table illustrates the key differences between PPF and Tax-saving Fixed Deposit (FD):


Public Provident Fund (PPF)

Tax Saving Fixed Deposit(FD)

Lock-in period

15 years

5 years



6.50% - 8.25%

Minimum Investment

Rs. 500

Rs. 100

Loan facility


Not available

Premature withdrawal


Not Allowed


Exempt from tax for investment of upto Rs. 1,50,000 per annum

Tax deducted at source applicable


Therefore, investing in PPF is a better option if the individual has a long term horizon in mind since it is tax free, and no such tax benefit is available in the case of FDs. However, if an individual wants to invest for a short term, FDs might be better.

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