Rajkumar Anguluri·Software Engineer · Founder, Artha Engine·Last reviewed 13 April 2026·Methodology
Independent decision-support tool. Artha Engine is not a financial services provider, does not sell loans or insurance, and has no commission relationships with banks or insurers.
FD vs PPF
Which safe instrument actually beats inflation after tax? Compare FD's post-tax return against PPF's tax-free compounding.
Your numbers
Same annual investment — FD taxed at your slab vs PPF fully tax-free.
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Winner's corpus
₹40.7L
PPF wins after tax
PPF's tax-free status gives it a ₹5.0L edge. At 30% tax bracket, FD's effective return drops to 5.3%.
PPF is the better safe instrument for this horizon — but remember the 15-year lock-in.
FD vs PPF
PPF
₹40.7L
WinnerFD
₹35.7L
PPF wins by 14%.
Tax-free compounding is PPF's edge.
PPF maturity
₹40.7L
FD maturity (pre-tax)
₹41.4L
FD after tax
₹35.7L
FD effective rate
5.3%
PPF has EEE tax status
Contribution deductible under 80C, interest tax-free, maturity tax-free. FD interest is taxable at your slab rate.
At a glance
- What it compares
- FD maturity (after TDS/tax) vs PPF maturity (tax-free). Same annual contribution.
- Key insight
- PPF almost always wins after tax because FD interest is taxed at your slab rate.
- Who should use this
- Conservative investors choosing between safe instruments for 5-15 year horizons.
- Verdict logic
- FD corpus after tax deduction vs PPF corpus (fully exempt).
How It Works
This is the drill-down layer. The flagship flow leads with a recommendation, and this page lets you inspect the underlying model.
- FD effective rate = nominal rate × (1 − tax bracket).
- PPF compounds at declared rate, fully tax-free.
Assumptions
The recommendation stays blunt, but the assumptions remain visible.
- FD interest taxed at slab rate annually.
- PPF rate assumed constant.
- FD tenure capped at 10 years; PPF at 15 years.
FAQ
The follow-up questions people usually ask after the main recommendation is already clear.
Is PPF always better than FD?
For horizons over 5 years, almost always — due to tax-free status. FD wins only when you need liquidity (PPF has a 15-year lock-in) or when you're in the zero-tax bracket.
Sources & references
Every formula and assumption above is grounded in these authoritative sources.
Reserve Bank of India
India's central bank. Sets the repo rate that drives home loan interest, publishes lending guidelines, and regulates commercial banks.
Income Tax Department of India
The Income Tax Department publishes official slab rates, deduction rules, and filing guidance every assessment year.
Related tools & decisions
Keep going from here — each link carries the same cluster context.
What to do next
Calculations and decision frameworks, not personalised financial advice. The numbers on this page are based on the inputs you supplied and the regulatory rules in effect when this page was last reviewed. They are not a recommendation to buy, sell, hold, port, or surrender any specific financial product. Consult a SEBI-registered investment advisor, a qualified tax professional, or a licensed insurance broker before acting on a financial decision involving your money.
Artha Engine is an educational decision-support website. We do not offer loans, sell insurance, distribute mutual funds, provide regulated investment advice, collect loan applications, or receive commissions from banks, insurers, AMCs, brokers, or other financial providers. References to RBI, SEBI, IRDAI, Income Tax Department, or other authorities are source citations only. Artha Engine is not affiliated with, endorsed by, or sponsored by any government authority, regulator, bank, insurer, AMC, or broker. Artha Engine does not charge users fees for using calculators, comparison tools, articles, or financial health scoring. Mailing address: India.
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