Quick Comparison Table
| Feature | PPF | Bank FD | SSY |
|---|---|---|---|
| Current Interest Rate | 7.1% | 6.5 – 7.5% | 8.2% |
| Tax on Interest | Tax-free (EEE) | Taxable as income | Tax-free (EEE) |
| Section 80C Benefit | Yes (up to ₹1.5L) | Only 5-year FD | Yes (up to ₹1.5L) |
| Lock-in Period | 15 years | 7 days – 10 years | Until girl turns 21 |
| Minimum Investment | ₹500/year | ₹1,000 (varies) | ₹250/year |
| Maximum Investment | ₹1.5 lakh/year | No limit | ₹1.5 lakh/year |
| Premature Withdrawal | Partial from year 7 | With penalty (0.5-1%) | 50% after age 18 |
| Eligibility | Any Indian resident | Anyone | Girl child under 10 |
| Risk Level | Zero (Govt backed) | Very Low (up to ₹5L insured) | Zero (Govt backed) |
Understanding Tax Status: EEE vs Taxable
The biggest differentiator between these instruments is their tax treatment:
- PPF and SSY have EEE (Exempt-Exempt-Exempt) status: Your contribution is tax-deductible (under 80C), the interest earned is tax-free, and the maturity amount is tax-free. Triple tax benefit.
- FD interest is fully taxable: Interest from FDs is added to your total income and taxed at your slab rate. A 7% FD effectively yields only 4.9% if you are in the 30% tax bracket. TDS is deducted if annual interest exceeds ₹40,000 (₹50,000 for seniors).
Post-Tax Return Comparison (₹1.5 Lakh/Year for 15 Years)
| Instrument | Rate | Maturity Value | Post-Tax Value* |
|---|---|---|---|
| PPF (7.1%) | 7.1% | ₹40.68 lakh | ₹40.68 lakh |
| SSY (8.2%) | 8.2% | ₹46.23 lakh | ₹46.23 lakh |
| FD (7.0%, 30% bracket) | 7.0% | ₹39.77 lakh | ₹33.81 lakh |
| SSY advantage over FD | ₹12.42 lakh more | ||
*Post-tax for FD assumes 30% tax bracket. PPF & SSY are entirely tax-free.
💡 The Tax Advantage Is Enormous
Over 15 years, the tax-free status of PPF and SSY creates a difference of ₹7-12 lakh compared to an FD at similar interest rates. This is the power of EEE — you save tax three times (on investment, on interest, and on withdrawal).
When to Choose PPF
- You want a long-term, zero-risk investment with guaranteed returns
- You are in the 20% or 30% tax bracket — the tax-free interest adds enormous value
- You want to build a retirement or education corpus over 15+ years
- You have already maxed out EPF and want additional EEE instruments
- You value sovereign guarantee — PPF is backed by the Government of India
When to Choose FD
- You need flexible tenure — FDs can be as short as 7 days
- You may need the money within 1-5 years (wedding, car, emergency)
- You are in a low tax bracket (0% or 5%) — the tax disadvantage is minimal
- You want to invest more than ₹1.5 lakh/year — PPF has a cap, FD does not
- You want monthly or quarterly interest payouts for regular income
When to Choose SSY
- You have a daughter under 10 years old
- You want the highest guaranteed interest rate among government schemes (currently 8.2%)
- You are building a marriage or education corpus for your daughter
- You want EEE tax status with a higher rate than PPF
⚠️ Interest Rates Are Not Fixed
PPF and SSY rates are reviewed quarterly by the Government. The rates above are as of January 2026. PPF has ranged from 7.1% to 8.7% over the last decade. SSY has ranged from 7.6% to 9.2%. FD rates vary by bank and change frequently. Always check current rates before investing.
The Smart Strategy — Combine All Three
The optimal approach for most Indian families is not choosing one — it is using all three strategically:
- Emergency fund: Keep 6 months of expenses in a bank FD (instant liquidity)
- Long-term wealth: Max out PPF at ₹1.5 lakh/year for 15 years
- Daughter's future: Open SSY and invest ₹1.5 lakh/year until she turns 15
- Short-term goals: Use FDs for goals within 1-5 years (travel, gadgets, car down payment)
- 80C allocation: Use PPF or SSY to fill your ₹1.5L 80C limit — they give both deduction and tax-free returns
Calculate Your Returns
See exactly how much your money will grow in each instrument.
PPF Calculator FD Calculator SSY CalculatorHow We Research and Update This Guide
We cross-check formulas, slabs, and examples against published government, regulator, lender, and scheme documentation before updating the page.
- Official government notifications, tax guidance, and scheme rules are checked before formulas or explanatory text are updated.
- Worked examples are recalculated manually and matched against the on-page tool where relevant.
- Whenever rules change, the page date and examples should be revised together to avoid stale guidance.
Frequently Asked Questions — PPF vs FD vs SSY
PPF currently offers 7.1% per annum (compounded annually, tax-free). Bank FDs offer 6.5-7.5% depending on the bank and tenure, but FD interest is taxable. After accounting for tax (at 30% bracket), a 7% FD yields only 4.9% effective return — significantly lower than PPF. For investors in higher tax brackets, PPF delivers substantially better post-tax returns.
Yes. PPF and SSY are separate schemes with separate limits. You can invest up to ₹1.5 lakh per year in PPF and ₹1.5 lakh per year in SSY for each girl child (up to 2 children). However, the combined Section 80C deduction is capped at ₹1.5 lakh — so investing ₹1.5L in each will not give ₹3L deduction. Only ₹1.5L total qualifies under 80C.
PPF has a 15-year lock-in period. Partial withdrawals are allowed from the 7th year (up to 50% of the balance at the end of the 4th year or the preceding year, whichever is lower). Premature closure is allowed after 5 years only for specific reasons like serious illness, higher education, or change of residency status. Loans against PPF are available from the 3rd to 6th year.
Yes. Sukanya Samriddhi Yojana (SSY) can only be opened for a girl child below the age of 10 years. A family can open a maximum of 2 SSY accounts (one per girl child). The account matures when the girl turns 21, and partial withdrawal (up to 50%) is allowed for education or marriage after she turns 18.
It depends on your liquidity needs. If you will not need the money for 15 years, PPF is almost always better due to tax-free returns and 80C benefits. But if you need money within 1-5 years, FD is more practical due to easier premature withdrawal. Never lock up emergency funds in PPF — keep 6 months of expenses in FD or savings account.