The Difference Between EPF and PPF

Listen to our Podcast: Grow your wealth and keep it secure.

0:00 / 0:00

The Government of India has always been trying to promote the concept of saving and building capital among its citizens. With this goal in mind, the Indian government has launched a range of savings schemes for Indians such as EPF and PPF etc., and these have gone a long way in inculcating a culture of financial wisdom among the general public. 

Also Read: EPF or PF Withdrawal Rules

Knowing the Difference Between Schemes

A common savings scheme is the Provident Fund (PF) scheme. This is a voluntary savings scheme and individuals may opt for it or not. Another fruitful savings scheme is a mandatory scheme, the EPF or Employee Provident Fund scheme. This is mandated by employers and organisations and is offered to salaried employees in the Indian Public and Private Sectors. The EPF is governed by the EPFO (the Employee Provident Fund Organisation). 

It is easy to get confused about both these schemes, especially when you are searching for methods of saving your capital and building your financial portfolio. This is why it’s important to grasp the differences between the two in order to make informed decisions. Nonetheless, before doing that, it is important to know some basics about the schemes individually. 

The Public Provident Fund Scheme

The Public Provident Fund (PPF) scheme is a voluntary scheme for saving and you can opt for it if you are an Indian citizen, residing in India. Nonetheless, if you opened a PPF account while you were residing in India, and have since moved abroad, you are still allowed to maintain your PPF account. The balance in your PPF account grows with a pre-determined rate of interest and with a compound interest feature, you get interest over interest. The scheme is offered by nationalised banks, the most popular of which is the State Bank of India under the supervision of the Indian government. The current rate of interest that PPF accounts enjoy is 7.1%, but this may be subject to change according to revisions by the government. Unlike the EPF, the PPF is not managed by the EPFO, but by banks that offer the scheme. 

Also Read: UAN Member Portal

The Employee Provident Fund Scheme

The Employee Provident Fund (EPF) scheme is a savings scheme offered to all Indian salaried employees working in the Private and Public Sectors. This is not a voluntary scheme and it is managed by the EPFO (Employee Provident Fund Organisation) on behalf of the Indian government. Once an EPF account is opened for a particular employee, an employee can monitor their account through the EPFO portal online. 

The Employee Provident Fund scheme is mainly a savings and retirement scheme that is designed to generate a corpus functioning as a safety net during retirement when people remain unemployed. In this scheme, employees and employers contribute a percentage to employees’ EPF accounts on a monthly basis. Furthermore, organisations with 20 employees or more are eligible to avail of the EPF scheme and have to do so aligned with Indian employment laws and regulations.

The practice of contributions from an individual’s income towards a retirement savings plan is meant to instil a sense of financial planning for the future. Essentially, such a mandate that is enforced by the EPFO forms one of the main differences between the PPF and EPF. Anyway, an EPF account is not merely an account for savings. It also earns interest at 8.15% per year, and this interest is compounded (if no premature withdrawals are made). 

The Difference Between the PPF and the EPF

Although both the EPF and PPF schemes share specific similarities in that they work on the basis of savings schemes and earn interest which may be compounded, there are key differences between the two schemes. You may have already gauged what some of the differences are but they are mentioned below, in terms of certain parameters, to give you more clarity: 

  • Nature of the Scheme

The EPF is a savings scheme that works towards saving for an employee’s retirement. The PPF is a general savings scheme. 

  • Eligibility Criteria

The EPF scheme is open to all Indian residents who are employees in the Public and Private Sectors, subject to organisations having 20 employees or more. The PPF scheme is open to all Indians irrespective of whether they are employed or not.

  • Contributions Made

The contribution towards an EPF account is 12% of the employee’s salary, comprising basic salary and dearness allowance). The employer may make a contribution too. In terms of PPF, a person holding the account has to make a minimum contribution of Rs. 500 per year and a maximum of Rs. 1.5 lakh per year. 

  • The Period of Maturity

The period of maturity in an EPF account is until retirement. The period of maturity of a PPF account is 15 years from the date of opening the account, but this can be extended. 

  • Withdrawals

Premature withdrawals can be undertaken from an EPF account if individuals remain unemployed for a period of 2 months or more. In the case of a PPF account, withdrawals are permitted after the end of the 7th year of account holding. 

  • Rates of Interest

As past trends go, EPF interest rates have always been on the higher side compared to PPF interest rates. 

  • Taxation

In case an employee withdraws above Rs. 50,000 from the EPF account before the end of a 5-year period of service in the company, the amount withdrawn is applicable for TDS at the rate of 10%. The contributions made to the EPF account are exempt from any taxation as per Section 80C of the Indian Income Tax Act of 1961. 

Regarding the PPF account, any contribution made within the limit of Rs. 1.5 lakh in any financial year is exempt from tax, aligned with Section 80C of the Indian Income Tax Act. Furthermore, the maturity amount (including accrued interest) is exempt from any taxation. 

Also Read: EPFO: Understanding the Scheme and Benefits

Final Lines on PF Accounts

The EPF and PPF schemes foster a habit of saving in people and this, in turn, leads to sound financial planning in the future. Both schemes teach people to manage their finances for the future and potentially grow their wealth so that they can collect a corpus. However, there are distinctions between the two, and salaried employees have the privilege of enjoying the financial fruits of both EPF and PPF accounts.

Share this article: 

Read More Blogs

Our Secure Trading Platforms

Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading

Bajaj Broking App Download

7 Lac+ Users


4.3 App Rating


4 Languages


₹ 3800 Cr MTF Book