PPF and an equity SIP are two of the most common ways to save every month. PPF pays a rate set by the government, is tax-free and cannot fall. A SIP in an equity fund can grow faster but is taxed when you sell, and its value goes up and down. To compare them fairly, compare what each leaves you after tax.
The setup
₹10,000 at the start of every month for 15 years, PPF’s full term. That is ₹18 lakh saved.
- PPF at 7.1%, the rate for October–December 2026, held for the whole term. Interest is worked out monthly, credited once a year, and tax-free.
- Equity SIP at an illustrative 10% a year before tax. Taxed when sold: short-term gains on the last year’s instalments, long-term gains above ₹1.25 lakh.
- Recurring deposit at an illustrative 7%, with the interest taxed every year at 31.2% (the 30% slab plus cess).
What each leaves you
- Equity SIP: ₹37.44 lakh, after ₹2.72 lakh of tax.
- PPF: ₹31.56 lakh, tax-free.
- Recurring deposit: ₹26.20 lakh, after ₹5.09 lakh of tax on the interest.
- Equity SIP₹37.44 lakh
After ₹2.72 lakh tax
- PPF₹31.56 lakh
Tax-free
- Recurring deposit₹26.20 lakh
After ₹5.09 lakh tax
The lighter end of a bar is the tax. SIP at 10% a year before tax; PPF at 7.1%; RD at 7% with interest taxed at 31.2%. Fund returns are assumed, not promised. Markets can fall.
- Equity SIP, after tax
- PPF
- Recurring deposit
Years of saving
See the numbers
| Years of saving | Equity SIP, after tax | PPF | Recurring deposit |
|---|---|---|---|
| Today | ₹0 | ₹0 | ₹0 |
| Year 1 | ₹1.25 lakh | ₹1.25 lakh | ₹1.23 lakh |
| Year 2 | ₹2.64 lakh | ₹2.58 lakh | ₹2.52 lakh |
| Year 3 | ₹4.17 lakh | ₹4.01 lakh | ₹3.87 lakh |
| Year 4 | ₹5.85 lakh | ₹5.54 lakh | ₹5.29 lakh |
| Year 5 | ₹7.65 lakh | ₹7.18 lakh | ₹6.78 lakh |
| Year 6 | ₹9.58 lakh | ₹8.94 lakh | ₹8.34 lakh |
| Year 7 | ₹11.68 lakh | ₹10.82 lakh | ₹9.97 lakh |
| Year 8 | ₹13.98 lakh | ₹12.83 lakh | ₹11.68 lakh |
| Year 9 | ₹16.50 lakh | ₹14.99 lakh | ₹13.47 lakh |
| Year 10 | ₹19.24 lakh | ₹17.30 lakh | ₹15.35 lakh |
| Year 11 | ₹22.25 lakh | ₹19.77 lakh | ₹17.32 lakh |
| Year 12 | ₹25.55 lakh | ₹22.42 lakh | ₹19.39 lakh |
| Year 13 | ₹29.15 lakh | ₹25.26 lakh | ₹21.55 lakh |
| Year 14 | ₹33.11 lakh | ₹28.30 lakh | ₹23.82 lakh |
| Year 15 | ₹37.44 lakh | ₹31.56 lakh | ₹26.20 lakh |
The SIP line is what you would keep if you sold that year, after tax.
At 10% a year, the SIP comes out about ₹5.88 lakh ahead. The recurring deposit trails because its interest is taxed every year, while PPF’s is not taxed at all.
The number that decides it
The SIP only wins if the fund does well enough. With these figures, it needs a return above 7.79% a year before tax to beat PPF. At 7% a year, it would keep about ₹29.72 lakh, less than PPF.
| Fund return a year | SIP keeps | PPF keeps | Ahead |
|---|---|---|---|
| 6% | ₹27.58 lakh | ₹31.56 lakh | PPF by ₹3.97 lakh |
| 7% | ₹29.72 lakh | ₹31.56 lakh | PPF by ₹1.84 lakh |
| 8% | ₹32.06 lakh | ₹31.56 lakh | SIP by ₹50,242 |
| 10% | ₹37.44 lakh | ₹31.56 lakh | SIP by ₹5.88 lakh |
| 12% | ₹43.90 lakh | ₹31.56 lakh | SIP by ₹12.35 lakh |
₹10,000 a month for 15 years. The switch is at 7.79%. Fund returns are assumed, not promised. Markets can fall.
Try it
Your monthly saving over 15 years
- You put in
- ₹18 lakh
- Equity SIP₹37.44 lakh
After ₹2.72 lakh tax
- PPF₹31.56 lakh
Tax-free
- Recurring deposit₹26.20 lakh
After ₹5.09 lakh tax
So the real question is how confident you are of beating that rate, after costs, for 15 years. Nobody knows future returns; the calculator shows the answer at returns 2 points either side of yours.
What the numbers leave out
- Risk. A SIP can be worth less than you put in for years at a time. PPF cannot.
- Access. PPF money is locked in: loans are possible from the third year and partial withdrawals from the seventh. A fund can be sold any time, though selling early may cost short-term tax.
- The PPF rate can change. The government reviews it every quarter; the comparison holds it at today’s rate.
- The old tax regime. If you use it, PPF deposits can also cut your tax, which helps PPF further.
- The limit. PPF takes at most ₹1.5 lakh a year, so ₹12,500 a month is the most you can put in.
Many people use both: PPF for the part that must be safe, a SIP for the part that can wait out bad years. Try your own amount and rates in the SIP vs PPF vs RD calculator.
For education only. Not investment, tax or insurance advice. Examples use the figures stated in the guide; check your own before you act.