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When it comes to safe and stable investment options, two names often come up—Fixed Deposit (FD) and Public Provident Fund (PPF). Both are known for offering guaranteed returns without market-linked risks, making them popular choices for conservative investors in India. However, while both options seem similar on the surface, they differ significantly in terms of interest rates, tax benefits, lock-in periods, and liquidity.

If you're planning to invest your money without risking your capital, it's essential to compare FD and PPF based on your financial goals. Let’s break it down to help you decide what suits you best.

💰 Interest Rates: Who Offers More?

• FDs (Fixed Deposits): Most banks offer interest rates between 6.7% to 7.1% per annum, depending on the term of the deposit and the bank’s policy.

• PPF (Public Provident Fund): The current government-mandated rate stands at 7.1% per annum, which is usually revised every quarter.

📊 Verdict: While FDs may offer similar returns, PPF generally provides a slightly better or equivalent interest rate, particularly when considering its tax-exempt nature.

📜 Tax Benefits: PPF Wins Here

• PPF: Offers tax deduction under Section 80C (up to ₹1.5 lakh annually) in the old tax regime. Most importantly, the interest earned is completely tax-free, even under the new regime.

• FD: Unless it is a tax-saving FD with a 5-year lock-in, interest earned on regular FDs is fully taxable as per the individual’s income slab.

💡 Tip: If tax saving is a key priority for you, PPF clearly holds an edge.

⏳ Lock-in Period & Liquidity

• PPF: Comes with a 15-year lock-in period. Partial withdrawals are permitted only after the 7th year, and under specific conditions.

• FD: Offers flexibility, with tenures ranging from a few days to several years. You can break an FD prematurely, although you may face a small penalty.

🏁 Verdict: If liquidity and short-term access to funds are important, FD is the more flexible option.

💼 Investment Limits

• PPF: You can invest a minimum of ₹500 and a maximum of ₹1.5 lakh per year.

• FD: There is no upper cap. You can invest as much as you like, even in crores.

So, for those with larger investable surplus, FD is more suitable in terms of flexibility and capacity.

🤔 Final Verdict: FD or PPF?

🧠 Smart Investor’s Advice

If you have short-term goals or large sums to park safely, FD may be your best bet. However, if you're looking for tax-free long-term wealth accumulation, PPF is a solid choice. Ideally, a balanced approach—investing in both—can offer the best of both worlds: security, liquidity, and tax savings.