Difference Between EPF and PPF

Last Updated On: 29 May 2025

5 min read

EPF (Employees’ Provident Fund) and PPF (Public Provident Fund) are two popular savings schemes in India designed to help individuals build long-term wealth. While both offer tax benefits and secure returns, they cater to different types of investors. This guide highlights the key differences between EPF and PPF, helping you choose the right option.

What is EPF?

The Employees’ Provident Fund (EPF) is a retirement savings scheme mandated for salaried employees working in organizations registered under the Employees’ Provident Fund Organisation (EPFO).

Eligibility: Only salaried employees in organizations with 20+ employees.
Contribution: Employee contributes 12% of basic salary + DA, employer contributes the same (part of it goes to EPS - Employee Pension Scheme).
Lock-in Period: Until retirement or withdrawal under specific conditions.
Tax Benefits: Tax-free under Section 80C; interest is tax-free if withdrawn after 5 years.

What is PPF?

The Public Provident Fund (PPF) is a government-backed savings scheme open to all Indian citizens, including salaried, self-employed, and unemployed individuals.

Eligibility: Any Indian citizen (NRIs cannot open new accounts but can hold existing ones).
Contribution: Minimum ₹500 per year, maximum ₹1.5 lakh per year.
Lock-in Period: 15 years (partial withdrawals allowed after 5 years).
Tax Benefits: Exempt-Exempt-Exempt (EEE) status; contributions, interest, and maturity amount are tax-free under Section 80C.

EPF vs PPF – Key Differences

Feature	EPF	PPF
Eligibility	Only salaried employees	Available to all individuals
Contribution	12% of basic salary + DA	₹500 to ₹1.5 lakh per year
Employer Contribution	Yes	No
Lock-in Period	Until retirement (partial withdrawal allowed)	15 years (partial withdrawal after 5 years)
Interest Rate	Announced annually (8.15% for FY 2023-24)	Fixed by the government (7.1% for FY 2023-24)
Tax Benefits	Tax-free after 5 years under Section 80C	Fully tax-free under Section 80C (EEE status)
Premature Withdrawal	Allowed under specific conditions	Allowed after 5 years for emergencies
Managed By	EPFO (Employees' Provident Fund Organisation)	Government of India

Which One Should You Choose?

Choose EPF if: You are a salaried employee looking for employer-matched retirement savings.
Choose PPF if: You want a risk-free investment with tax-free maturity benefits, suitable for self-employed individuals.

Conclusion

Both EPF and PPF are excellent savings schemes, but they serve different financial goals. EPF is ideal for salaried employees seeking retirement benefits, while PPF is a great choice for long-term, risk-free wealth creation.

By understanding the difference between EPF and PPF, investors can make an informed decision based on their financial goals and employment status.

To know more:

AMFI - Introduction to Mutual Funds

Mutual Funds vs ETFs - Which One to Choose?

Disclaimer:

The information is for general purposes only and not an investment advice. Readers should seek professional advice before taking any investment related decisions.

FAQs

Can I invest in both EPF and PPF?

Yes, salaried employees can contribute to both schemes for additional tax benefits.

Which offers better returns, EPF or PPF?

EPF generally offers higher interest rates but is linked to salary; PPF offers stable returns.

Can I withdraw money from my EPF account before retirement?

Yes, under specific conditions like home purchase, marriage, or medical emergencies.

Is PPF better than EPF for long-term investment?

PPF is better for self-employed individuals, while EPF is more beneficial for salaried employees.

Is the interest earned on PPF tax-free?

Yes, PPF follows the EEE tax structure, making it completely tax-free.

Can I open a PPF account if I already have an EPF account?

Yes, both accounts can be held simultaneously.

What happens to EPF after retirement?

You can withdraw the full amount or transfer it to the Employees' Pension Scheme (EPS).

Can NRIs invest in EPF or PPF?

NRIs cannot open new PPF accounts, but they can continue existing ones until maturity. EPF accounts remain active if contributions continue.

What is the minimum and maximum tenure of PPF?

The minimum tenure is 15 years, extendable in blocks of 5 years.

Which is safer, EPF or PPF?

Both are safe government-backed schemes, but PPF has guaranteed tax-free returns, whereas EPF depends on employment status.

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The information is for general purposes only and not an investment advice. Readers should seek professional advice before taking any investment related decisions.

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