Difference Between GPF & PPF Last Updated : 14 Oct 2019

The PF is a savings investment instrument managed by the Government of India. It has different accounts - as the General Provident Fund (GPF) and Public Provident Fund (PPF) which have differences in eligibility and maturity periods.

Risk-averse individuals opt for savings instruments that offer assured returns and tax benefits, especially, retirement savings schemes that are offered by the government. Public Provident Fund (PPF) and General or Statutory Provident Fund (GPF) are two such popular long-term savings schemes. Learning the difference between these two provident funds can help you choose a savings scheme that is best suited to your financial needs and capabilities.

The factors that differentiate these two schemes are listed below:

Factors PPF GPF
Eligibility Any Indian citizen aged 18 years and above Government employees who were hired before 1 January 2004
Maturity Period Reaches maturity 15 years from the date of opening the account, can be extended in blocks of 5 years each Reaches maturity at retirement or superannuation of the employee
Interest Rate 8% (for Q1 of FY2019-20) 8% (for Q1 of FY2019-20)
Deposit Limit
  • Minimum contribution – Rs.500 per year
  • Maximum contribution – Rs.1.5 lakh per year
  • Maximum number of deposits – 12 per year
  • Employee contribution - 6% of the salary
  • Government contribution – 6% of the employee’s salary
Tax Benefits Under Section 80C of I-T Act, contributions, interest earned, and returns are tax-free Similar tax benefits as PPF
Loan Facility Loan against PPF is available between the 3rd and 6th financial years of opening the account Loan against GPF can be availed at any time during a government employee’s career

Comparison between PPF and GPF

  • GPF and PPF eligibility: Both salaried and self-employed individuals can invest in PPF while only government employees can invest in GPF. Government employees who are residents of India can invest in GPF, only if they have joined the service before 1 January 2004. Any Indian citizen aged 18 years and above can invest in PPF. Only one PPF account can be opened and maintained per individual except for accounts that are opened on behalf of minors. Non-Resident Indians (NRIs) and Hindu Undivided Family individuals are not eligible for PPF.
  • GPF and PPF contribution: GPF account holder contributes 6% of his or her salary in regular instalments for a certain period. The government also contributes 6% of the employee’s salary to the account. A minimum investment of Rs.500 should be made per financial year and up to Rs.1.5 lakh can be deposited in a PPF account in a year. Deposits can be made in a maximum of 12 instalments in a year.
  • GPF and PPF partial withdrawal: PPF partial withdrawals can be made from the 7th year onwards.
  • GPF and PPF account maturity period: When the account holder/employee reaches retirement or superannuation, the GPF account reaches maturity. PPF lock-in period is 15 years from the date of opening the account. Post maturity, the account tenure can be extended in blocks of 5 years each.
  • GPF and PPF Premature account closure: PPF premature closure is allowed after the completion of 5 years from the date of opening the account for treatment of life-threatening diseases for self or dependents and educational expenses of self or dependents (higher education).
  • GPF and PPF tax benefits: Under Section 80C of the Income Tax Act, 1961, contributions, interest accrued, and final withdrawals from PPF are exempted from tax.
  • GPF and PPF loan facility: GPF Advance is a facility offered to the account holder/employee wherein he or she can obtain loan against GPF throughout his or her career. The loan can be repaid in regular instalments. No interest rate is applied to the borrowed sum. Any number of GPF cash advances can be availed of by the employee. Loan against PPF can be availed of between the 3rd and 6th year of opening the account. Up to 25% of the PPF account balance can be obtained as loan.

Conclusion

PPF is a voluntary investment scheme that is open to all Indian citizens while GPF is a mandatory savings scheme launched only for government employees.

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