Comparison between EPF and PPF

By the end of this article of Comparison between EPF and PPF you will decide which is better one for you and what baby steps you take to achieve.

Table of Contents

To understand about basic difference between EPF and PPF we have to understand what PPF and EPF is. In my earlier article I have described EPF so clearly, please click on the link given below to understand EPF .

Complete guide on Employee provident Fund.

What is PPF ?

PPF is Public Provident Fund. It can be opened in any bank account and contributed by anyone including an employee. Here no Pension and insurance facility is available like EPF. Only compounding interest rate is provided by bank annually.

You are the sole contributor to PPF. It helps you save your tax under Section 8o C up to the limit of 1.5 lakh per annum.

What is the benefits of PPF ?

PPF is coming under EEE (Exempt-Exempt-Exempt)category. The compounding rate of interest helps to grow you money and able to return appreciable amount of money at the time of maturity. Summaries below points to understand better;

Any can can be eligible to avail the facility.
Easy to use and access. Available in every bank so you can deposit simply by auto debit from your bank account.
Tax benefits under EEE category.
Compounding rate of Interest.
Locking your fund certain period to grow.
Safety and security of your fund irrespective of Market volatility.

Pictorial presentation of Comparison between EPF and PPF

Drawbacks of EPF

EPF is Taxable after certain limit.
High return cant be expected from EPF.
Interest rate is diminishing every year.
EPF is mandatory for an employee.

How to apply for EPF E- Nomination ?

Benefits of EPF.

Drawbacks of PPF

Can not liquidity the Fund at the time of requirement. Wait for certain time period.
No uniform interest rate, Every bank have different interest rate.
PPF is not mandatory. You can voluntarily choose it as per your budget.

Refer below table for Comparison between EPF and PPF

Key Points	EPF	PPF
Controlling Authority	Controlled by Government of India (Employee Provident Fund Organization)	Controlled by various Banks
Nature of Saving	It is statutory in nature. Means mandatory for all employee.	It is voluntary in nature
Contributed by	Employer and employee are required for contribution collectively.	Employer is not required for contribution. Anyone can create PPF account in Bank & deposit it.
Contribution rate	12% of basic from both Employee & Employer shall be deposited every month	No limit set for PPF, anyone can deposit any amount. 1.5 Lakh shall be deposited in a Year within 3 intervals.
Eligibility Criteria	An employee must work 30 days of continuously in any establishment to eligible for EPF	No such criteria are desired for PPF. Anyone can deposit any amount to his/her PPF account to save till maturity.
Withdrawal Duration	An employee can withdraw EPF after leaving Employer	Any time PPF can be withdrawn. Generally it can be withdrawn after a period of 5 Year from the date of opening.
Tax implication	EPF is attract tax after certain limit as per new rule. For Government employee tax slab limit is 5 Lakh/ annum & for private sector employee tax slab limit is 2.5 lakh per annum.	It is exempted from Tax
Rate of Interest	Government decide Interest rate every year. Current rate of Interest is 8.15%.	No fixed interest rate is decided by Government. It depends upon Market growth. Generally varies from 8% to 12%.
Tax saving under IT act.	It is coming under Sec-80C	It is coming under Sec-80C

Conclusion:

Both EPF and PPF are recommended to invest and to save your money because in both cases your fund is safe and rate of interest in growing in a compounding rate every year.

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Question & Answers :

Does EPF or PPF have more liquidity ?

EPF has more liquidity. Means any time you can withdraw your EPF amount from your EPF account. In the above article of Comparison between EPF and PPF you can better understand you have to wait minimum 5 years to withdraw for PPF.

What is EEE category in Income Tax ?

EEE category means Exempt-Exempt- Exempt category. In this category no tax is lived at time of deposit, you can save Tax by showing as saving while filling income tax and no tax levied at the time of withdrawal of fund.

What is the interest rate of PPF ?

Interest rate of PPF varies from Bank to Bank. It depends in which bank you have open your PPF account.

Where to open PPF account ?

PPF account can be opened in any Bank including Postal Bank. In most the bank in India this facility is available.

What is full form of PPF ?

Full form of PPF is Public Provident Fund