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Guilherme Mazui

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What is the Difference Between EPF and PPF?

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The main difference between EPF (Employees' Provident Fund) and PPF (Public Provident Fund) lies in their eligibility, taxation, and withdrawal rules. Here is a comparative analysis of the two schemes:

EPF (Employee Provident Fund):

  • EPF is a retirement savings scheme for employees of the organized sector.
  • It is mandatory for employees to contribute, and employers also contribute an equal amount.
  • The interest rate on EPF is set annually by the Employees Provident Fund Organization (EPFO).
  • Withdrawals are taxed if made before five years of continuous service.
  • EPF account-holders can transfer their balances when changing employers.
  • Employees must hold an EPF account until permanent retirement.

PPF (Public Provident Fund):

  • PPF is open to everyone, including employed, self-employed, unemployed, or retired individuals.
  • It is a voluntary scheme, and the PPF interest rate is reviewed every quarter.
  • The current PPF interest rate is 7.1%.
  • Withdrawals from PPF are tax-free.
  • Contributions to a PPF account are tax-exempt under Section 80C of the 1961 Income Tax Act.
  • Individuals can make a maximum of 12 contributions in a year to a PPF account.

In summary, EPF is a mandatory retirement savings scheme for employees of the organized sector, with both employer and employee contributions, while PPF is a voluntary savings scheme open to all individuals, including self-employed or retired individuals. The interest rates and taxation rules differ between the two schemes, with PPF offering tax-free withdrawals and EPF offering tax-exempt withdrawals if made after five years of continuous service.

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  • What is the Difference Between EPF and PPF?
  • Comparative Table: EPF vs PPF

    • Comparative Table: EPF vs PPF

    Here is a table highlighting the differences between EPF (Employees' Provident Fund) and PPF (Public Provident Fund):

    Feature EPF PPF
    Eligibility Open to employees of companies registered under the EPF Act Open to all Indian citizens, including employed, self-employed, and retired individuals
    Contribution Employer and employee contribute 12% of the employee's basic salary Minimum of ₹500 per year, maximum of ₹1.5 Lakh per year
    Interest Rate 8.15% (current rate) 7.1% (current rate)
    Tax Benefits EPF contributions are exempt from taxation under Section 80C Interest and amount received on maturity are exempt from taxation
    Maturity EPF account must be held until permanent retirement 15 years, with the option to extend in blocks of 5 years
    Withdrawal Allows withdrawals under certain conditions Partial withdrawals allowed after the 7th financial year
    Statutory Backing Managed by the Employees' Provident Fund Organisation Managed by post offices and banks

    EPF is a long-term savings scheme for employees of the organized sector, with a fixed interest rate declared annually by the EPFO. On the other hand, PPF is a government-supported savings scheme open to everyone, with a fixed return set by the government every quarter. The choice between EPF and PPF depends on your unique circumstances and financial goals.

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    Guilherme Mazui

    Guilherme Mazui is graduated in journalism from the Federal University of Minas Gerais (UFMG) and a master's degree in Communication from the University of São Paulo (USP). In addition, he has experience in advertising writing and has worked as a content editor in several companies.