Provident funds are security funds that salaried employees can get from their organisations. Both public and private sectors offer provident fund schemes to their employees. These funds mainly provide security after retirement.
Hence, there are two types of provident funds, EPF and PPF. Follow the article to get insight into EPF vs PPF, their differences and other related information.
The full form of EPF is Employee’s Provident Fund, where both employee and employer contribute a monthly amount that accumulates into a larger amount. Employees can withdraw at the time of retirement or when quitting their job.
Under the Employees Provident Fund and Miscellaneous Act 1952, the working of the EPF is regulated. Further, EPFO or Employee’s Provident Fund Organization and employees can go to the official website of this organisation for any EPF-related issue.
PPF, or Public Provident Fund, is a well-known savings scheme plan provided by the government. The PPF holders enjoy a substantial amount of tax savings under 80C. Hence, the purpose of PPF is also similar to EPF, providing financial security after retirement.
In addition, a PPF account is quite profitable for the employees as it gives returns more than a savings account. However, a PPF account has a lock-in period of 15 years.
The EPF and PPF differences are as follows:
|
Point of Comparison |
EPF |
PPF |
|
Eligibility |
Salaried employees of any established organisation. |
Both salaried and self-employed individuals. |
|
Account Type |
Recurrent-cum savings. |
Savings account. |
|
Rate of interest |
8.1% for the 2022-2023 financial year. |
7.1% for the 2022-2023 financial year. |
|
Government Act |
Employees Provident Fund and Miscellaneous Provisions Act 1952. |
Government Savings Bank Act 1873. |
|
Contributor |
Both employer and employee. |
Only salaried employees or self-employed individuals. |
|
Lock-in Period |
The lock-in period of EPF is till retirement. |
The lock-in period is for 15 years. |
|
Investment Amount |
Minimum 12% of the base salary. |
Minimum 500 per year. |
|
Maximum Investment |
Employer’s contribution is the same throughout the scheme; however, there is no limitation in VPF. |
₹ 1,50,000 per year. |
|
Tax Benefit |
Contributions are tax-deductible. However, after 5 years, the maturity amount will be tax-free. |
PPF holders get a tax deduction under section 80C. Besides, the maturity amount is also tax-free. |
|
Premature Withdrawal |
Employees can withdraw money as per requirement. |
Individuals can get a loan against this account. |
Check out the benefits of EPF and PPF for a more precise understanding of these accounts.
The benefits one can get from an Employee’s Provident Fund account are as follows:
Some benefits of a PPF account are as follows:
A brief discussion on the taxation process of PPF vs EPF is as follows:
The limitations of EPF and PPF accounts are as follows:
Hope you have got a comprehensive idea of EPF vs PPF. Further, the article has also mentioned other important details, such as taxation and the benefits of these provident funds. Thus, you can consider this guide to gain proper knowledge of these security accounts and utilise them properly.
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Disclaimer: This information is added only for informative purposes and collected from different sources across the Internet. Digit Insurance is not promoting or recommending anything here. Please verify the information before making any decisions.
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