Do you know the comparison of EPF vs PPF ? Here you can know the difference between Employee Provident Fund and Public Provident Fund. Both EPF and PPF have many benefits and advantages. You can get the complete details about EPF and PPF by reading the full article.
EPF vs PPF – Overview
The EPF and PPF are long term investment tools in which you can secure your retirement days. They are very steady investments for your savings. The main benefit of this scheme is the individuals can invest a small amount of savings, and you can earn huge amount at the time of retirement. Many people do not know the difference between Employee Provident Fund and Public Provident Fund. Therefore, we are providing the complete details about EPF and PPF on this page. So, the users can check the details to choose a better plan. For every individual, it is better to know the importance of EPF and PPF before investing. So, every employee should know about Employee Provident Fund and Public Provident Fund.
EPF means Employee Provident Fund. It is applicable only for the salaried employees after their retirement. This scheme is working under government organization. EPF account is used for saving the money. The employees can change the EPF account from one organization to other organization if they change their job from one location to another. The employee has to contribute 12% from their basic salary every month.
As per the rules of Employee Provident Fund Organisation (EPFO) the employee and the employer have to contribute 24% from their salary to the Employee Provident Fund. At the time of the employee’s retirement, they can withdraw the money from the EPF account or if the employee is changing his/her job. The employees can transfer the EPF amount from their Employee Provident Fund account to another organization when the employee wants to change the job location.
Brief details of PPF
The full form of PPF is Public Provident Fund. This scheme is introduced by the government for the employees to provide old age income security. In this Public Provident Fund Scheme, the employees can save money for their future needs. Therefore, the employees can invest the money in PPF accounts and they can withdraw the money with attractive tax-free offers. The minimum investment should be Rs.500, and the maximum investment should be Rs.1,50,000. Every individual should maintain only one Public Provident Fund account for saving their money.
The Public Provident Fund Scheme is only applicable for the residents of India. Non-resident Indians are not eligible for PPF, and also the Hindu undivided family individuals are restricted to open a Public Provident Fund Account. Once, you deposit the money the account matures only after 15 years. Before the maturity period, the employees are not allowed to withdraw the money. The employee can close the PPF account only in case of the account holders death.
EPD vs PPF Comparision
|Difference||For EPF||For PPF|
|Interest rate||8.75% per annum||8.7% per annum|
|Tax Benefit||Up to Rs.1 lac per year under Sec 80C|
|Period of Investment||Till resignation, retirement or even earlier||15 years|
|Loan availability||Partial withdrawals are available||50% withdrawals after 6 years|
|Employer contribution on basic + DA||12%||NA|
|Employee contribution on basic + DA||12%||NA|
|Taxation on maturity returns||Tax-Free||Tax Free|
|Risk factor||Liquidity Risk||Liquidity Risk|
|Eligibility||Salaried employees can only open an EPF Account||Need not be a salaried employee to open a PPF account|
|Risk||There is no risk when the employee withdrawal the EPF amount||Once your PPF is returned to you there is no risk factor.|
Difference b/w EPF and PPF
The EPF vs PPF main difference between the Employee Provident Fund and Public Provident Fund are given in the above tabular column. So, the interested people can check them. The employees who want to know more difference between EPF and PPF can follow the below sections. We are providing some more important points and differences in the below sections. Therefore, the interested people can see the full article to know the details and differences of EPF vs PPF.
- Except for NRIs, Everyone in India can invest in PPF. The individuals who belong to a salaried person can invest in EPF. The users can open PPF account from SBI, ICICI Bank, Axis Bank, etc.
- EPF offers an interest rate of 8.7% per year, and the PPF interest rate is 8.75.
- In Employee Provident Fund, you can make withdrawals for the contribution of house, marriage. The users can take loans up to 50% from the PPF and EPF accounts.
- You can change your EPF account while changing jobs. The maturity period for PPF is 15 years. So, you are not allowed to withdrawal the money before the tenure period.
- The difference between EPF and PPF is that the Employee Provident Fund contribution gets Section 80C benefits.
- If offers a tax-free contribution for every 5 years from the different companies.
- Any self-employed individuals who are working in the unorganized sectors can apply for a PPF account. But in Employee Provident Fund, only the salaried individuals are eligible to apply for the new EPF account.
Which is better? – EPF vs PPF
By comparing the difference between the Employee Provident Fund and Public Provident Fund, both have their individual benefits and advantages. But EPF is a little bit more beneficial than the PPF. Employee Provident Fund has a contribution towards future. Public Provident Fund is not having such contribution. In EPF the employees can make withdrawal money from their account at any time. But PPF is not like that. You have to withdraw the money only after the completion of the maturity time. The main drawback in PPF is the individuals can not change their account from organization to another. This facility is available in the EPF.
Comparing the interest rates, Employee Provident Fund is offering more interest rates than the Public Provident Fund. By comparing the above factors, you can get an idea about Employee Provident Fund and Public Provident Fund. Therefore, you can easily select the best plan from them for your future. So, before investing the individuals have to take a good decision for their better future.