Difference between EPF and PPF

The Employee Provident Fund provides benefits for salaried and employed residents of India. The Public Provident Fund is open to any resident of India and is both a tax savings and savings instrument.

Provident fund is a savings scheme in India wherein workers contribute a part of their salary to the scheme. Employers also contribute to the fund on behalf of their employees in a regular provident fund scheme. The fund amount is later paid out to the retiree or it can be withdrawn after a certain period of time too.

Employee provident Fund:

An Employee Provident Fund (EPF) is a provident fund scheme administered by the Employees’ Provident Fund Organisation (EPFO) in India. EPFO is a statutory body of Government of India under the Ministry of Labour and Employment. The EPF scheme covers workers in India and other countries with which bilateral agreements have been signed.

Employee Provident Fund is the best saving scheme available for the salaried class in India. In this scheme, the employee makes contribution (a fraction of their salary) to the funds regularly on a monthly basis. The contributions made by a group of people is then pooled together and invested in a trust.

Who is Eligible for EPF?

Any resident of India who is salaried and employed can be eligible to become a member of Provident Fund scheme from the date of joining the job. The employee becomes eligible for the provident fund benefits along with insurance and pension benefits once they become a member.

How does Employee Provident Fund Work?

For employees who earn a basic salary of up to Rs.15000, contributing to Employee Provident Fund is mandatory. A certain percentage of the basic allowance money earned by the employee is contributed to the fund account. As of now the employee contributes 12% while the employer contributes 3.67% to the provident fund account. The employer’s contribution is exempted from tax while the employees’ contribution to the account is taxable.

A member of the Employee provident Fund scheme is entitled to withdraw the fund amount standing to the credit of their retirement after they attain 58 years. If the PF amount is withdrawn before 5 years of service then the amount will be taxable except a few cases wherein the PF amount will be exempted from tax. In case the account holder moves on to another job, their EPF account in the old company will be transferred to the new company.

Public Provident Fund:

Public Provident Fund is a type of savings cum tax savings account offered in India. It was introduced by National Savings Institute of Ministry of Finance in 1968. The fund offers reasonable returns along with income tax benefits. A minimum of Rs.500 is required to open a PPF account and the maximum that can be deposited is Rs.1.5 lakh. A deposit more than Rs. 1.50 lakh p.a. will not earn any interest and will be not be eligible for rebate under income tax.

Who is Eligible for PPF?

Any individual who is a resident of India is eligible for the account. Only one PPF account can be maintained per individual except for accounts that are opened on behalf of minors. Non-resident Indians (NRIs) are not eligible for a PPF account. Hindu Undivided Family individuals cannot open a PPF account.

How does Public Provident Fund Work?

Public Provident Fund is a savings cum tax savings instrument. The account can be opened any of State Bank of India branches or its subsidiaries, selected branches of designated nationalised banks and selected post office branches. It is a 15 years scheme and the account matures only after 15 years. There is no room for premature withdrawal with PPF. The nominee can close the account before maturity only in case of death of the account holder. The interest received on the account is completely tax free.

Difference between EPF and PPF?

Account Type:

In EPF account, both the employer and employee are responsible for managing the account whereas in PPF, the account holder is solely responsible as they are the only contributor.


Only employed and salaried individuals are eligible for EPF while even minors can apply for a PPF account.


Premature withdrawals in EPF will attract tax while no premature withdrawal is allowed in PPF.


In PPF, the account matures only after 15 years while in EPF, the maturity of the account depends on the term of employment of the account holder.


The interest received on PPF is tax free. Investments in EPF is eligible for tax deductions.

EPF is a better option for salaried individuals owing to employer contribution and liquidity whereas PPF is best suited for self-employed individuals and individuals working in unorganised sector where EPF is unavailable.

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