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Comparative Analysis of EPF and PPF

What is the Employee Provident Fund (EPF)?

Employee Provident Fund (EPF) or Provident Fund (PF) is a savings scheme extended by the government to the employees of the organized sector. Employees Provident Fund Organization (EPFO), a statutory body under the Employees’ Provident Fund Act, declares the EPF interest rate every year. It is currently 8.55%.

The employer and employee are required to contribute a minimum of 12% of the employee’s basic salary and dearness allowance every month to the EPF account.

Only employees of companies registered under the Employees’ Provident Fund Act, can invest in the EPF or PF.

What is the Public Provident Fund (PPF)?

Public Provident Fund or PPF, a government-supported savings scheme, is extended to all – employed, unemployed, self-employed or even retired.

It is not a mandatory scheme but if you choose to start a PPF, the minimum contribution is Rs. 500 and the maximum contribution is Rs. 1.5 Lakhs per year. The government sets a fixed rate of return for the PPF every quarter. You can open a PPF account with most of the major banks or post office. The current PPF rate is 8%.

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Comparison between EPF and PPF:

 

Employee Provident Fund

Public Provident Fund

The employees of the company will be eligible to invest in the EPF if the company is registered under the Employees’ Provident Fund and Miscellaneous Act, 1952.

 

All Indians, except for NRIs, are eligible to invest in PPF. This includes students, self-employed, employee or retired citizens.
A minimum contribution of 12% of the basic salary and DA. You can increase it voluntarily but the employer need not match it. A minimum contribution of Rs. 500 and a maximum contribution of Rs. 1,50,000
You can close the EPF when you retire or quit your job permanently. You can also transfer your EPF while changing to a new company. You can opt out of EPF only at your first job when you are a fresher and can join the scheme in the future. The PPF is for 15 years. It is extendable after that for an increment of the tenure for 5 years.
The EPF rate of interest is 8.55% The PPF rate of interest is 8.00%
The Employer and the Employee both contribute a minimum of 12% of Basic Salary and DA a month. You contribute or your parent can contribute if you are a minor.
The contribution is tax deductible and the maturity amount is tax-free only after the completion of 5 years. The contribution is tax deductible and the maturity amount is tax-free.
Employees Provident Fund And Miscellaneous Provisions Act, 1952, governs EPF. Government Savings Banks Act, 1873, governs PPF.
You can partially withdraw the money in EPF under certain circumstances. You cannot partially withdraw the money from PPF even if you are unemployed.

 

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