Both PPF and EPF are popular, government-backed, tax-efficient, long-term savings schemes in India. PPF stands for Public Provident Fund. On the other hand, EPF stands for Employees’ Provident Fund. EPF is managed by the Employees’ Provident Fund Organisation (EPFO) while PPF is managed by the Central Government via authorized banks and post offices.
In this blog post, we shall discuss the difference between PPF and EPF. Here, we shall clear all your doubts regarding these schemes, so you can decide which one’s better in your case.
PPF is a very low-risk, secure scheme managed by the Central Government to promote small savings. It is a voluntary scheme that offers an investment with reasonable returns combined with income tax benefit.
It was launched by the National Savings Institute of the Ministry of Finance in 1968. It was introduced under the Public Provident Fund Act of 1968. PPF has a 15-year lock-in period. However, partial withdrawals are allowed from the 7th financial year. In a financial year, only one withdrawal is allowed.
PPF accounts can be opened at post offices, nationalized banks and major private banks. At present, the PPF interest rate is 7.1% per annum. It is a fairly attractive interest rate since there is zero default risk.
Like PPF, EPF is a very low-risk, secure scheme. However, it is a completely different scheme and is not related to PPF at all. Basically, EPF is a retirement savings scheme for salaried employees managed by the EPFO.
The EPF scheme was introduced under the Employees' Provident Fund and Miscellaneous Act of 1952. Under this scheme, both employee and the employers contribute 12% of the basic salary + dearness allowance (DA) monthly in the employee’s EPF account each month.
This scheme is mandatory for organizations having 20 or more employees. Once an organization is EPFO-registered, it is mandatory for it to cover employees earning a basic salary + plus DA of Rs. 15,000 or less per month. Even if you’re not mandatorily covered by EPF, you can opt for it on a voluntary basis provided you get employer’s consent. For FY 2025-26, the EPF interest rate is at 8.25%.
In the table below, we have provided you with the key differences between PPF vs EPF. After going through the table, you will be able to understand how both the schemes differ from each other:-
|
Aspect |
PPF |
EPF |
|
Full Form |
PPF’s full form is Public Provident Fund. |
EPF’s full form is Employees’ Provident Fund. |
|
Definition |
PPF is a government-backed savings scheme for everyone. It offers safe, fixed returns along with tax benefits. |
EPF is a government-backed retirement savings scheme for salaried employees with employer contributions. |
|
Voluntary/Mandatory |
PPF is a voluntary scheme. |
EPF is a mandatory scheme for organizations with 20 or more employees. |
|
Managed By |
Central Government through the National Savings Institute under the Ministry of Finance. |
Employees' Provident Fund Organisation (EPFO) under the Ministry of Labour and Employment. |
|
Legal Framework |
Governed by the Public Provident Fund Scheme, 2019. |
Governed by the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. |
|
Interest Rate |
Currently, the PPF interest rate is 7.1% p.a. |
The EPF interest rate is 8.25%, at present. |
|
Lock-in Period |
PPF has a mandatory 15-year lock-in period. However, partial withdrawal is allowed from the 7th financial year. |
Funds under EPF are locked primarily until retirement or termination of employment. |
|
Interest Tax |
The maturity proceeds are tax free after the 15-year lock-in period ends. |
Upon retirement or after 5 years of continuous service, the maturity proceeds are tax free. |
EPF and PPF are very low-risk schemes backed by the Government of India. EPF is a mandatory scheme for organizations with 20 or more employees, while PPF is a voluntary scheme for all the residents of India. The EPF scheme was established under the Employees' Provident Funds and Miscellaneous Provisions Act of 1952. It is older than the PPF scheme, which was introduced under the Public Provident Fund Act of 1968. By now, we hope this post has answered all your questions about these schemes.
Q1. Can NRIs make new contributions to EPF?
A. No, Indian citizens who have attained NRI status cannot make new contributions to the EPF once they become non-residents.
Q2. Can NRIs invest in the PPF scheme?
A. NRIs may choose to invest in the PPF account they opened when they were Resident Indians. However, they cannot open a new PPF account after attaining NRI status.
Q3. What is the interest rate on PPF?
A. The interest rate on PPF is currently 7.1% p.a.
Q4. What is the interest rate on EPF?
A. The interest rate on EPF is 8.25% for FY 2025-2026.
Q5. Do I need to pay tax on PPF withdrawal?
A. No, you do not need to pay tax on PPF withdrawal. It is completely tax free.
Q6. Do I need to pay tax on EPF withdrawal?
A. If you withdraw PPF after you have completed 5 years of continuous service, then you do not need to pay any tax on EPF withdrawal. However, if you withdraw the EPF amount before 5 years, then the amount is taxable and TDS applies if the amount is Rs. 50,000 or more than that.
Q7. What exactly is EPF Form 19?
A. Form 19 refers to an EPF form for final settlement of EPF balance. It is used when you leave a job for retirement or in certain cases like unemployment, migration abroad or inability to work.
Q8. What is PPF Form C?
A. Form C is a PPF form required for making partial withdrawals from a PPF account. It is required by the guardian when the withdrawal is sought from a minor’s account.
Q9. Is PPF a mandatory scheme like EPF?
A. No, the PPF scheme is a voluntary scheme. It is not a mandatory scheme unlike the EPF scheme.
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.
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