PPF v/s FD: Which one is not backed by government?
16 Mar 2026

Public Provident Fund (PPF) and Fixed Deposits (FDs) are two of the most popular investment options in India.

While both promise safety and assured returns, they differ in terms of tenure, interest rates, and liquidity.

Knowing these differences can help you make informed investment decisions.

Here's a look at the key differences between PPF and FDs to help you choose the right option.

Understanding PPF's long-term benefits
#1

PPF is a long-term savings scheme with a minimum tenure of 15 years. It offers tax benefits under Section 80C of the Income Tax Act.

The current interest rate for PPF is around 7.1% per annum, which is revised quarterly by the government.

The minimum annual investment required is ₹500, while the maximum is ₹1.5 lakh.

Fixed deposits: Flexibility & short-term gains
#2

Unlike PPF, fixed deposits offer flexibility in terms of tenure, ranging from seven days to 10 years.

Banks usually offer interest rates between 3% and 7% based on the deposit amount and tenure.

Unlike PPF accounts, FDs allow premature withdrawals (though penalties may apply) and offer higher liquidity than PPF accounts.

Tax implications on PPF vs FD
#3

Investments in PPF are eligible for tax deductions up to ₹1.5 lakh under Section 80C every financial year. However, the interest earned on PPF accounts is tax-free after maturity.

On the other hand, interest earned on FDs is taxable as per the individual's tax slab, with no deductions available against the principal amount invested.

Risk factors: Government backing vs bank reliability
#4

PPF accounts are backed by the government, making them risk-free investments with guaranteed returns over time.

In contrast, while bank FDs are relatively safe due to RBI regulations, they are not government-backed like PPFs.

Investors should weigh these risks when choosing between these options based on their risk appetite and financial goals.