Even though the features of the PPF and VPF seem similar, the biggest difference between PPF and VPF is that PPF can be availed by self-employed persons and employees from unorganized sectors, while VPF is only available for salaried individuals.

PPF stands for Public Provident Fund and VPF for Voluntary Provident Fund. Both are financial instruments offered by the Government of India to help you save for your retirement. By investing in these schemes, you can receive assured returns on your savings. Well, before investing in these schemes, it is important you know how these investments schemes operate.

Difference between PPF & VPF

Features PPF VPF

Who can Invest?

Any Resident Indian, except NRls

Any Resident Employed Individual

Min Period of Investment

15 years

Up to retirement or resignation, whichever is earlier

Employee Contribution on Basic + DA


Voluntary (Upto 100%)

Employer Contribution



Taxation on Maturity Returns


Tax Free

Tax Deduction

As per section 80 C

As per section 80 C


Can be extended indefinitely by extending for 5 years each after that.

Can transfer account to new company till retirement.

Maximum Loan

50% after 6 years

Partial withdrawals is permitted

There are some differences exist between a PPF account and VPF account. Listed below are the key difference between both accounts:

  • A VPF account is only meant for salaried employees while a PPF account can be opened by self –employed and people working at unorganized sectors.
  • Interest offered on a VPF account is same with an EPF account which is 8.5%. On the other hand, a PPF account offers 7.1% on your savings.
  • Returns received from a PPF account are free from income tax. On the other hand contributions made towards a VPF account qualifies for tax deduction under Section 80C of the Indian Income Tax Act, 1961.
  • In case of a PPF account, the deposited amount cannot be withdrawn unless the account matures. The maturity period of a PPF account is 15 years. But when it comes to VPF accounts, employers can withdraw funds as and when they need to meet their financial requirements. However, if an employee withdraws funds from a VPF account before the account completes 5 years, the amount will taxed.

For more information, Check out related articles VPF Interest Rate, VPF Limit, VPF Rules & VPF Form

How does a PPF account operate?

It is an investment scheme mainly designed for the self-employed individuals and workers of unorganized sectors to provide them with income security at old age. It is fixed income security scheme that enables you to invest a minimum of a minimum amount of Rs. 500 and a maximum of Rs. 1,50,000. You can guaranteed and tax free returns by investing in a PPF account.

What is a VPF account?

The Voluntary Provident Fund account is another investment option that helps a salaried individual to save more towards their retirement, apart from the mandatory deduction of 12% of the basic salary. Voluntary Provident Funds can be accessed by salaried individuals only. However, employers cannot force an employee to contribute to VPF. It is a voluntary move taken by an employee.

Where to invest

Based on your eligibility and requirement, you can decide where to invest. Only then you are eligible to open a VPF account when you are a salaried individuals. The VPF account serves as a good investment option for high-income salaried individuals. But, if you are a non –salaried individuals, you have no choice but to invest in a PPF account.

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