Difference Between GPF & PPF

Comparison between PPF and GPF

1. 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.
2. 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.
3. GPF and PPF partial withdrawal: PPF partial withdrawals can be made from the 7th year onwards.
4. 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.
5. 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).
6. 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.
7. 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.