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  • Difference between PF and PPF

    What is PF?

    PF or Provident Fund consists of contributions made by a group of people. It is a government led savings scheme that promotes retirement savings among the salaried population in India. In this scheme, a group of salaried employees invest a part of their salary into the account and the money is later paid back when the individual retires or when it attains maturity. The employers also invest an equal amount in the fund along with the employees, for the employees.

    Different Types of Provident Fund:

    Listed below are the different types of Provident Funds available in India.

    • Employee Provident Fund: In Employee Provident Fund 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. The fund amount is later paid back to the retiree or they can choose to withdraw it after a certain period of time.
    • Unrecognised Provident Fund: This scheme is started between the employer and employee but is not approved by the Commissioner of Income Tax department.
    • Statutory Provident Fund: This fund is for employees of government sector, educational institutions and Universities.
    • Public Provident Fund: It is a provident fund where in self-employed individuals and children can make a contribution. Unlike other funds, the individual need not be salaried.

    Who is eligible PF?

    Any individual who is a resident of India and is earning income or can make contributions consistently is eligible for a provident fund. The individual needs to be salaried to be able to contribute to EPF, UPF and SPF. PPF allows both self-employed and salaried individuals to make a contribution.

    What is PPF?

    PPF or Public Provident Fund is a savings and tax saving fund in India. It is a type of provident fund account. The fund offers attractive returns along with tax saving 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 resident of India who can make consistent contribution to the fund is eligible for Public Provident Fund. The individual need not be salaried and even self-employed individuals can contribute for the fund. They should be able to make a contribution of a minimum Rs.500 in order to maintain the fund.

    Difference between PF and PPF?

    1. Provident fund is a type of savings fund account while Public Provident Fund is a part of Provident Fund.
    2. Provident fund is further divided into different types of fund accounts while Public Provident fund is a type of provident fund.
    3. Mostly salaried employees are eligible for provident fund while self-employed individuals are eligible for public provident fund.
    4. Only the individual contributes to the fund in Public provident fund unlike the other provident funds where in both employer and employee contribute to the fund.
    5. In Public provident fund, funds can’t be withdrawn before the completion of 15 years while in other types of provident fund, the funds can be withdrawn before its completion at a fee.

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