7 Difference Between EPF and PPF

EPF and PPF are two schemes which are introduced by the government to promote the savings desires among people. In India both the schemes are used to save the money for the future. EPF is a compulsory scheme in which an organization adds 12% of the salary or the particular person. While PPF is not much compulsory it’s a general scheme in which any person saves money from 500 to 150K per year.

Many of us think that both the sachems are similar but there are many differences. Before understanding the difference, we have to understand their definition. In this article we will discuss the definition and differences between EPF and PPF. So, read the full article to clear the doubts.

EPF vs PPF

Sr. no.	EPF	PPF
1	Only salaried persons of any company are eligible to contribute.	all Indians are eligible for the PPF account except NRI.
2	A fixed 12% amount of the salary is contributed	Minimum investment is 500 and maximum 150k per year.
3	Interest rate for EPF is 8.64%.	Interest rate is 7.1%
4	Both employer and employee contribute.	Self or parents are contributors.
5	A person can withdraw money in case of unemployment.	Partial withdrawal is possible after the completion of 5 years.
6	Retirement age is 58 years.	Account is opened for 15 years.
7	Automatically deposited from the salary every month.	Manual deposit.

EPF

It is a funds saving cum retirement scheme in which 12% of the salary of the person is contributed by the company. This amount is deducted every month from the salary of the person. The companies which have more than 20 it’s compulsory to register under the EPFO. EPF is governed by EPFO.

EPF rates are announced every year which is calculated after the return generated from the EPF corpus. EPF provides more liquidity.  EPF allows withdrawal of 75% in case of unemployment. If unemployment remains for two months in that case, the person is eligible to withdraw all the money. EPF accounts provide flexibility in case of unemployment up to 3 years. For this period defined interest rates continue to add in the amount. After 3 years this interest stops.

After attaining the retirement age which is 58 years, a person withdraws all amount from the EPF account. Tax is applicable on the withdrawal of the money before the completion of the 5 years of service.

Generally, 12% of the salary is contributed by the employer and employee. From this all the amount from the employee directly goes to the EPF account while the employer 3.67% adds in the EPF account and 8.33 % is transferred to the employees’ pension scheme.

PPF

PPF is public provident Fund. This scheme is directly available for all Indian public. This scheme was introduced by the national saving institute in 1968. PPF is a safe long-term Tax-free saving scheme. This scheme work on the compound interest which helps to make a huge amount for the retirement. For this government defines and changes rate of interest every year.

Every Indian is eligible for the PPF account except Hindu undivided families. In case of unsound mind or minor a joint account of PPF with the parents can open. PPF accounts can be opened in some selected banks and post offices.

PPF account is opened for the 15 years after the completion of the 15 years person can withdraw all money with the interest. After 15 this account may be closed or extended for 5 years more. In this account the minimum installment is 500 and the total amount which can be deposited in account is 150k. Only 12 installments are allowed in one year.

Partial withdrawal is allowed after the completion of the 5 years of the account . PPF is a very good scheme for a person who is self-employed or out of the EPF scheme. After the completion of the 5 years a person is eligible for the loan against 25% money in EPF account.

Main difference between EPF and PPF

1. In EPF only salaried persons of any company are eligible to contribute in EPF. While all Indians are eligible for the PPF account except NRI.
2. EPF a fixed 12% amount of the salary is contributed. In PPF minimum investment is 500 and maximum 150k per year.
3. Interest rate for EPF is 8.64% and interest rate is 7.1% for PPF.
4. In EPF both employer and employee contribute. In PPF self or parents are contributors.
5. In EPF, a person can withdraw money in case of unemployment. In PPF partial withdrawal is possible after the completion of 5 years.
6. Retirement age is 58 years in EPF while PPF account is opened for 15 years.
7. In EPF, a person is eligible for the loan after completion of 5 years’ service. While PPF provides a loan against 25 % of the balance standing in credit of the PPF account.
8. EPF is automatically deposited from the salary every month. While PPF is manual deposit.

Conclusion

Both EPF and PPF schemes are government schemes in which people save money for the future and the government. Both EPF and PPF schemes are very famous due to the interest rates. EPF provides flexibility to the people to withdraw the partial money. PPF is very good for investment and good returns. While in PPF the amount is withdrawn after the completion of 5 years. EPF and PPF are good saving schemes.

This is all about the difference between EPF and PPF. We hope you understand the topic very well. If you have any doubts please feel free to comment on us. For more interesting topics like this please go through our website.