(Last Updated: July 9, 2019)

Difference Between EPF & PPF - Where To Invest?



  • Whenever we talk about retirement corpus, Employee Provident Fund and Public Provident Fund come to our mind. These schemes are meant for long-term savings and support our after retirement plans. These instruments are known to be secure & steady with guaranteed earnings. You can start with small savings and end up with significant retirement corpus!

    People frequently ask: which one is better? Honestly, both schemes have their own charms. We cannot pick out randomly. Both have been introduced for specific purposes. According to the objectives, both schemes are placed in the front row.

    So, Let's check out how both schemes operate differently.

    Employee Provident Fund Scheme:
    As the name implies, EPF scheme is specially designed for salaried persons. Both employee and employer have to contribute towards the EPF account. Precisely, the employee and employer have to make 12% of the employee's basic salary.
    Employee Provident Fund Organization is the government body that monitors and operates this scheme.

    Every Indian resident who is a salaried person can avail services of EPF scheme. The employee can become the member of a scheme from the date of joining the establishment. The best part, you can get the pension and insurance claims once you become eligible for EPF Scheme.

    EPF: Tax Benefits
    The employer's contribution is completely exempt from tax. Whereas, your contribution as an employee is subject to tax.
    The withdrawals are allowed after the retirement. If you try to make the premature withdrawal before the 5 years period of opening, the interest compounded becomes taxable! That's why don't go for partial withdrawals unless you need them badly!

    Public Provident Fund Scheme:
    The salaried employees can get retirement benefits from EPF and pension schemes. But, for self-employed and business class individuals, nothing is better than Public Provident Fund.

    With this long term investment scheme, one can start saving for retirement with a very small amount. You can deposit the minimum of Rs. 500 only. However, a deposit over Rs. 1,50,000 is not possible during a financial year.

    Every Indian resident can apply for this scheme. One resident can maintain only one PPF account. Non-residents or Hindu Undivided Family persons cannot open PPF account.

    PPF is a saving scheme that comes with interest plus tax benefits. You can open this account at any authorized bank or post office.

    The maturity tenure of PPF account is 15 years.

    EPF VS PPF: Difference

    Let's check out the difference between both schemes:

    1. Contribution:
    In EPF, both employees and employer make the contribution towards the account.
    In PPF, the account holder is the sole contributor to the account.
    2. Eligibility:
    Salaried employees can apply for EPF.
    Salaried, self-employed and business/professional persons can open the PPF account.
    3. Maturity:
    The maturity tenure is dependent on the employment term in the case of EPF. But, tax is applicable if you withdraw before 5 years.
    For PPF, the maturity period is 15 years. Also, the maturity amount is tax free.
    4. Interest:
    EPF investment is subject to tax if withdrawal is made before 5 years.
    Whereas Interest earned on PPF balance is exempt from tax.

    EPF vs PPF: Which Scheme Is Better?
    As mentioned in beginning, every employee should select EPF scheme for building the retirement corpus. While self-employed or business class can avail PPF scheme for long term saving as retirement plan.

    I feel both have their own advantages. In fact, such schemes encourage us to save money towards our retirement. So, these are anyways good for investors who wish to enjoy risk free returns.

    What do you think about these 2 long term investment schemes? Any suggestions or ideas you have, feel free to share here.



  • Public Provident Fund (PPF) scheme is a popular long term investment option that is being backed by the Government of India. It provides interest rates and returns that are fully exempted from tax. Whereas, Pension accounts or National Provident Fund (NPF) is a kind of investment where a fixed sum is paid on a regular basis. This invested sum becomes available after retirement. A pension plan can also be said as ‘Defined Benefit Plan’. the Employees Provident Fund (EPF) are feasible options for saving money. EPF enables one to save regularly, which can grow into a considerable amount by the time the user retires. Although both the saving options give tax benefits and are government-sponsored schemes, there are basic differences relating to the quantum of tax exemptions that can be utilized, degree of flexibility of determining the equity exposure and rate of return, among other things.



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