EPF and PPF – Difference and Comparisons| North Loop Official Blog
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14 Dec 2020

EPF and PPF – Difference and Comparisons

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Introduction -

In this article, we will compare two popular investment options– PF and EPF, talk about the differences between the two and discuss how they fare in terms of tax-benefits, interest rate etc. But before we begin, let us try and understand the role of these two investment options in India.

EPF – EPF or the Employees’ Provident Fund is a government established savings scheme that works by building a monetary reserve from the contribution extended by both employees and their employer each month. Around 12% of the employee’s monthly salary gets contributed to the Employee Provident Fund Scheme.

The EPF interest rate is declared every year by the EPFO, and for the current year, it is 8.50%. Moreover, you can only invest in EPF if you are an employee of a company registered under the EPF Act.

PPF – PPF or the Public Provident Fund is also a government-supported savings scheme, but it is open to everyone. That means you can invest in PPF as an employee, self-employed, unemployed or even retired individual. PPF has a fixed return that is set by the government every quarter, and the current interest rate is 7.1%. You can invest from Rs.500 up to Rs.1.5 lakh per year in the Public Provident Fund.

PF and EPF - Eligibility, Limits, Tenure, Interest Rate, Tax Benefits

Table -

Any Indian (except NRI). Includes students,   self-employed, employee or retired persons   
Only salaried employee of a company registered under   EPF Act   
Investment Amount   
Min Rs.500 and Max Rs.1,50,000   
12 % of salary   
15 Years, extendable after that for a block of 5 years   indefinitely   
Can be closed (when quitting job permanently)   
Rate of Interest   
Contributor to Fund   
Self or Parent in case of a minor   
Both Employer and Employee   
Tax Benefit   
Contribution is tax-deductible under Sec 80C. Maturity   amount is also tax-free.   
The contribution is tax-deductible. Maturity amount is   tax-free only on completion of 5 years.   
Governing Act   
Government Savings Banks Act, 1873 (earlier Public   Provident Fund Act, 1968)   
Employees Provident Fund And Miscellaneous Provisions   Act, 1952.   
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Safety -

The only difference between EPF and PF in terms of safety is that EPF is slightly riskier due to equity exposure. However, since both are government-backed savings instruments, they are a considerably safe investment option. The EPF gets managed by a statutory body called the EPFO while the PPF is managed directly by the government.

Liquidity –

The best EPF investment advantage is in terms of liquidity. That is because withdrawals from PPF are only allowed after the expiry of five years from account opening, and there is no such limitation in case of EPF.

In the case of EPF, you can withdraw 75% of your EPF corpus if you have been unemployed for a month and 100% if it exceeds two months. However, any withdrawal within five years of account opening becomes taxable. You can also make partial withdrawals from your EPF account after citing the reasons for doing so.

In the case of PPF, you cannot withdraw money due to unemployment. Though partial withdrawal is allowed after the expiry of six years, there is a specified maximum limit that is lower of the following –

50% of the account balance as at the end of the financial year, preceding the current year, or

50% of the account balance as at the end of the 4th financial year, preceding the current year.

Another point to note is that different banks have different partial withdrawal norms. While some of them such as ICICI and Axis Bank allow withdrawals after five years, there are some like SBI and HDFC Bank that let you withdraw after seven years.

Taxation –

Investment in EPF qualifies for tax deduction up to Rs.1.5 lakh per annum under Section 80C of the Income Tax Act, 1961 for both the employer and the employee contribution. Interest on the investment is also exempt from tax. EPF withdrawals are also tax-exempt unless made within five years of opening the EPF account.

Investment in the PPF account qualifies for tax deduction up to Rs.1.5 lakh per annum under Section 80C of the Income Tax Act, 1961. The interest on the investment and the maturity amount is also exempt from tax.

However, to enjoy tax exemption on the interest amount, it is necessary to declare it in the annual income tax return. Unlike EPF, PPF withdrawals are also tax-free without any limit on the number of years of completed service.


If you want to know how to become an EPF agent, you can check for regular recruitment updates and invites on the EPF India government website. The best way to understand how to become an EPF agent would be by reading the guidelines present on the official portal.

Conclusion –

While both PPF and EPF are government schemes and offer tax benefits under Section 80C of the Income Tax Act, you can choose the one most suitable to you based on factors like liquidity and interest rates.

If you are still wondering ‘how much can I invest in EPF’ or what are the ‘best EPF investments’, you can read the following blogs – EPF or PF – Eligibility, benefits and process

What is EPF balance?

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.