Reviewed by Artha Research·Last updated 13 April 2026
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.
Sibling tools
FD Calculator
Will this FD actually grow your money after tax and inflation? See the maturity amount, what drives it, and whether a better alternative exists for your horizon.
PPF Calculator
Will 15 years of PPF actually build a meaningful tax-free corpus? See the maturity amount, what drives it, and whether maxing the ₹1.5L cap is worth it for you.