4 Key Differences between Tax Saver Fixed Deposit and PPF Estimated reading time: 2 minutes, 1 second
tax saver fd vs ppf

4 Key Differences between Tax Saver Fixed Deposit and PPF

Posted on Tuesday, December 27th, 2016 | By IndusInd Bank

In this unpredictable and expensive world, it is important to have a practical financial map in place. Two of the best investment options are a Tax Saving Fixed Deposit and a Public Provident Fund. Once you open an FD account or a PPF, your money not only remains safe, but also multiplies along with earning tax benefits.

But which investment option should you select? Here’s a list of differences between a Tax Saver Fixed Deposit and a Public Provident Fund account to help you decide.

The Maturity Period

One of the major differences between the two financial plans is their maturity period. The maturity period for Tax Saver Fixed Deposit is 5 years (short-term investors) and for PPF it’s 15 years (long-term investors).

The Interest Rate

The interest rate for FDs is decided by the bank, whereas the interest rate for PPF is decided by the government. Therefore, the interest amount that you could earn from a Tax Saver Fixed Deposit would differ from bank to bank. The current rate (2016-2017) for PPF is 8.1%. Indus Tax Saver Scheme’s interest rate is 7% and the annualised yield rate is 8.3%.

Investment & Withdrawal Limit

While there’s no maximum ceiling to invest in a standard fixed deposit account, you can invest up to Rs. 1,50,000 in a PPF and a Tax Saver FD account. As for the withdrawal limit, you can withdraw a limited amount from a PPF account after completing 5 years of maturity period, but not from tax saving FDs.

Tax Benefit & Liability

You can claim the amount invested in both the schemes as deduction under Section 80C while filing your tax returns. Interest earned from PPF is considered as a non-taxable income, but Tax Saver FD account holders would have to pay tax on the interest earned according to their income tax slab rate.

Both are safe investment schemes to park your hard-earned money. Although, the deciding factor is – what kind of an investor are you? If you can lock your money in a long-term investment plan, then open a PPF account. But if you need a short-term investment scheme, then a Tax Saver Fixed Deposit account is ideal for you. As PPF is a government investment scheme, the procedure and the features are standard. In case of FDs, a personal relationship with banks like IndusInd Bank always pays off in the shape of flexible tenures, special rates, customised services and other attractive benefits.