Understanding EPF and PPF: Key Differences and Benefits
EPF vs PPF: Key differences, rules, tax benefits and returns explained
Mint
Image: Mint
The Employees' Provident Fund (EPF) and Public Provident Fund (PPF) are two major long-term savings schemes in India, each with distinct rules. EPF is mandatory for salaried employees, offering an interest rate of 8.25%, while PPF is a voluntary scheme with a 7.1% interest rate, accessible to all citizens. Both provide tax benefits.
- 01EPF is mandatory for salaried employees, while PPF is voluntary for all individuals.
- 02Current EPF interest rate is 8.25%, whereas PPF offers 7.1%.
- 03EPF contributions are made by both employer and employee, while PPF is funded solely by the individual.
- 04PPF has a lock-in period of 15 years, with options for extensions.
- 05Both schemes offer tax exemptions under Section 80C of the Income Tax Act.
Advertisement
In-Article Ad
The Employees' Provident Fund (EPF) and the Public Provident Fund (PPF) are two prominent savings instruments in India, each catering to different groups. EPF, governed by the Employees’ Provident Fund Organisation (EPFO), is designed for salaried employees, requiring contributions from both the employer and employee. It offers a competitive interest rate of 8.25% per annum, with tax benefits on contributions and interest earned. In contrast, PPF is a voluntary savings scheme available to all Indian citizens, providing a fixed interest rate of 7.1% this quarter. Individuals can invest a maximum of ₹1.5 lakh annually in PPF, which has a lock-in period of 15 years. After this period, funds can be withdrawn or the account can be extended for further tax-free compounding. Both schemes serve as effective tools for retirement savings and tax planning, with distinct eligibility and contribution structures.
Advertisement
In-Article Ad
These savings schemes provide individuals with secure options for retirement planning and tax savings, impacting their long-term financial health.
Advertisement
In-Article Ad
Reader Poll
Which savings scheme do you prefer for long-term investment?
Connecting to poll...
More about Employees’ Provident Fund Organisation
Read the original article
Visit the source for the complete story.