PPF vs Sukanya Samriddhi vs FD: Rates, Lock-in and Tax Compared
Compare PPF, Sukanya Samriddhi and bank FDs on interest rates, lock-in, deposit limits and tax (EEE vs taxable interest), with worked maturity values.
The Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY) and bank fixed deposits (FDs) are the three savings options most Indian families trust for guaranteed returns. They differ sharply in lock-in, flexibility and, above all, tax. A 7% FD and a 7.1% PPF may look similar on paper, but after tax they can end up lakhs apart over fifteen years.
See the maturity value: use the free PPF Calculator, Sukanya Samriddhi Calculator and FD Calculator to plug in your own amounts.
Interest rates on PPF and SSY are set by the Government of India and reviewed every quarter. The rates below (PPF 7.1%, SSY 8.2%) were in force at the time of writing. Check the current rates on the National Savings Institute or India Post website, or with your bank, before investing.
Quick comparison
| Feature | PPF | Sukanya Samriddhi (SSY) | Bank FD |
|---|---|---|---|
| Interest rate | 7.1% a year, compounded annually (revised quarterly) | 8.2% a year, compounded annually (revised quarterly) | Set by each bank; varies by tenure; extra for senior citizens |
| Who can open | Any resident Indian, one account per person (plus accounts for minors as guardian) | Parent or guardian of a girl child below 10 years; up to two girls per family (more for twins or triplets) | Anyone |
| Deposit limits | ₹500 to ₹1.5 lakh per financial year | ₹250 to ₹1.5 lakh per financial year | Usually from ₹1,000; no upper limit |
| Lock-in / tenure | 15 years, extendable in blocks of 5 years | Deposits for 15 years; matures 21 years from opening | 7 days to 10 years; tax-saver FD has a 5-year lock-in |
| Liquidity | Partial withdrawal from the 7th financial year; loans in years 3–6 | Up to 50% for education after the girl turns 18 or passes Class 10; closure on marriage after 18 | Premature withdrawal usually allowed with a small penalty |
| Tax on deposit | 80C deduction (old regime) | 80C deduction (old regime) | Only 5-year tax-saver FD qualifies for 80C (old regime) |
| Tax on interest | Exempt | Exempt | Fully taxable at your slab rate; TDS may apply |
| Tax on maturity | Exempt | Exempt | Principal is not taxed; interest is taxed yearly |
| Safety | Sovereign guarantee | Sovereign guarantee | DICGC insurance up to ₹5 lakh per depositor per bank |
What EEE means
PPF and SSY enjoy Exempt-Exempt-Exempt status: the deposit qualifies for a deduction under section 80C (in the old regime), the interest earned each year is tax-free, and the maturity amount is tax-free. FD interest, by contrast, is added to your income and taxed at your slab rate every year, even if you do not withdraw it. Under the new tax regime you lose the 80C deduction, but PPF and SSY interest and maturity stay tax-free.
Worked example: ₹1.5 lakh a year
Assume you deposit ₹1.5 lakh at the start of every financial year and the rates stay constant (they will not, but this shows the effect):
| Scheme | Years of deposit | Total deposited | Approximate maturity |
|---|---|---|---|
| PPF at 7.1% | 15 | ₹22.5 lakh | ≈ ₹40.7 lakh, tax-free |
| SSY at 8.2% | 15 (matures at year 21) | ₹22.5 lakh | ≈ ₹71.8 lakh, tax-free |
| FD at 7%, before tax | 15 | ₹22.5 lakh | ≈ ₹40.3 lakh |
| FD at 7%, after tax at 30% slab plus cess | 15 | ₹22.5 lakh | ≈ ₹33.5 lakh |
SSY's large lead comes from the higher rate and from six extra years of compounding after the last deposit. For someone in the 30% bracket, the tax-free status of PPF is worth about ₹7 lakh over 15 years compared with an FD at a similar rate.
Public Provident Fund in detail
- Open at a post office or most banks, including online through net banking.
- Deposit before the 5th of the month (and ideally before 5 April for the whole year): interest is calculated on the lowest balance between the 5th and the end of each month.
- Missing the minimum ₹500 deposit in a year makes the account inactive; it can be revived with a small penalty.
- After 15 years you can close the account, keep it without deposits, or extend it with deposits in 5-year blocks.
- Premature closure is allowed after five years only for specific reasons, such as serious illness or higher education, with a reduction in interest.
Sukanya Samriddhi Yojana in detail
- Open before the girl's 10th birthday with her birth certificate and the guardian's KYC.
- Deposits are required for 15 years from opening; the account keeps earning interest until it matures at 21 years.
- Withdrawals of up to 50% of the balance at the end of the previous financial year are allowed for higher education once she turns 18 or passes Class 10.
- The account can be closed early for her marriage after she turns 18, and in certain compassionate cases.
- It suits a long-term goal like higher education or marriage, but the money is not accessible for general needs.
Fixed deposits in detail
- Best for money you may need in the next one to five years, or for an emergency fund.
- Senior citizens typically get an extra 0.25% to 0.75%.
- Banks deduct TDS once interest crosses the threshold in a financial year (₹50,000 for most individuals and ₹1 lakh for senior citizens at the time of writing). Submit Form 15G or 15H if your total income is below the taxable limit.
- Small finance banks often pay more, but keep deposits within the ₹5 lakh DICGC cover per bank if safety is your priority.
- A recurring deposit works like a monthly FD if you want to save from salary.
Which should you choose?
- Have a daughter under 10? SSY usually offers the best guaranteed, tax-free return for her future.
- Want a long-term, tax-free, safe corpus for yourself? PPF is hard to beat, especially in a higher tax bracket.
- Need liquidity or a short-term goal? Use FDs, and ladder them across different maturities.
- Goals 10+ years away and comfortable with risk? Consider adding equity through SIPs alongside these. See SIP vs Lumpsum.
Many families use all three: SSY for a daughter, PPF as a retirement and safety anchor, and FDs for emergencies. The 80C limit of ₹1.5 lakh is shared across all eligible investments, so plan the split if you use the old regime. Our guide to choosing a tax regime explains when 80C still matters.
Compare with your numbers: try the PPF Calculator, then check the same amount in the SSY and FD calculators.
Frequently asked questions
What are the current PPF and SSY interest rates?
At the time of writing, PPF earns 7.1 percent and Sukanya Samriddhi 8.2 percent a year. The government reviews these rates every quarter, so check India Post or your bank for the current rate.
Is FD interest tax-free?
No. FD interest is added to your income and taxed at your slab rate every year. Only the principal of a 5-year tax-saver FD qualifies for an 80C deduction under the old regime.
Can I withdraw from PPF before 15 years?
Partial withdrawals are allowed from the seventh financial year, and loans between the third and sixth years. Premature closure is permitted after five years only for specific reasons.
How many Sukanya Samriddhi accounts can a family open?
One account per girl child, for up to two girls. A third account is allowed in the case of twins or triplets.
Are PPF and SSY useful under the new tax regime?
You lose the 80C deduction, but interest and maturity remain tax-free, so they are still attractive safe investments.