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EPF vs. PPF: Which One Is Better for Saving Money?

Personal Finance

A stress-free financial life after retirement is the dream for almost all people. For this, you need to save and invest. There are various schemes in which you can invest, with EPF and PPF being the most popular options for saving for a hassle-free future retirement.

Read on to learn the difference between an EPF (Employees Provident Fund) and a PPF (Public Provident Fund).

What is the Employees Provident Fund (EPF)?

EPF has been introduced by a statutory body called the Employees’ Provident Fund Organization (EPFO). EPFO works under the Indian Government’s Ministry of Labour and Employment.

An Employees Provident Fund (EPF) is a savings scheme for building a retirement corpus. In EPF, both the employer and employee should contribute 12% on a monthly basis to the EPF account. The return for EPF is slightly higher than the PPF scheme. The amount will be deducted from your salary and sent to the EPF Account directly.

What are the benefits of the Employees Provident Fund (EPF)?

Here are some of the benefits of EPF:

  • Secure Savings: As the EPF account is under the supervision of the government, it is hence a secure investment.
  • Higher Interest Rate: The interest given for an EPF account is higher than the PPF.
  • Flexible Choice: If there is an emergency or job loss, you can withdraw the amount from an EPF account.
  • Contribution: This is the best benefit that you can reap from the EPF account. The savings will be contributed both by you and the employer.
  • Withdrawal: You can withdraw the amount from the EPF account in case of an emergency.
  • Lock-in period: The lock-in period for the EPF scheme is until your retirement. You can also withdraw in the event of a job loss.
  • Tax Exemption: You can avail of tax exemption from the EPF scheme. As per Section 80C of the Income Tax Act (ITA), EPF is exempt from tax.

What is the Public Provident Fund (PPF)?

PPF Scheme (Public Provident Fund) is regarded as a secure option for saving and long-term investment in India. The main aim of the PPF scheme is to invest a small amount of money over a long period and create a corpus. The PPF scheme is maintained by the Central Government of India.

A PPF account will be opened when you invest in the PPF scheme. You can invest from INR 500 to INR 1,50,000. This account is open only to Indian citizens. PPF accounts can be opened at post offices and other participating institutions.

What are the benefits of the Public Provident Fund (PPF)?

Here are some of the benefits of PPF:

  • Secure Option: As the government is involved, it is one of the most secure investments. Security is the most sought-after advantage of the PPF scheme.
  • Higher Interest Rate: The interest given for the Public Provident Fund (PPF) is higher than the interest given for fixed deposits. This is because the authority to fix the interest rates lies with the government.
  • Flexible Deposits: The mode of depositing in a PPF account is very flexible. You can deposit via cash, cheque, demand draft (DD), or online mode.
  • Flexible Number of Deposits: The number of deposits that you make for a year into the PPF does not matter. You can deposit as many times as you need.
  • Emergency: During an emergency, you can partially withdraw the principal. However, it is only possible after the seventh year of account opening.
  • Tax Exemption: The greatest benefit is the tax exemption. As per Section 80C of the Income Tax Act (ITA), the PPF is exempt from tax. The returns from PPF are also tax-free.


Here is a simple table that gives you the exact difference between EPF and PPF. This will help you compare and invest in the best option of your choice.

ParticularsEmployees Provident Fund (EPF)Public Provident Fund (PPF)
Providing OrganisationEPFO (Employee Provident Fund Organization) – a statutory body.Post Offices and other participating institutions.
Interest Rate8.1%7.1%
EligibilityOnly for salaried individuals.Any Indian citizen except NRIs.
Investing Amount12% of the salary is mandatory.Can also be increased, optionally.Minimum Investment: INR 500Maximum Investment: INR 1,50,000
Lock-in PeriodTill retirement or resignation15 years or 15+5 years
Tax ExemptionApplicableApplicable
Contributing MemberBoth the employer and the employee.Only by employees.

EPF vs. PPF – Which One is Better for Saving Money?

Based on the above-mentioned aspects, you can come to the following analysis.

  1. Security: When it comes to security, both EPF and PPF schemes are secure. This is because they are guaranteed by the government of India.
  2. Interest Rate: When it comes to interest rates, the EPF account is the best since it offers a higher interest rate.
  3. Contributors: Under the Employees Provident Fund (EPF), both the employee and the employer will contribute. However, in the PPF scheme, only the employee will contribute. This makes EPF a better option.
  4. Withdrawal: When it comes to withdrawal, EPF is the best option, as you can withdraw whenever you need. Because under the PPF scheme, you will be able to partially withdraw only after a certain period.

Final Takeaway

By now, you must have a better understanding of the differences between the EPF and PPF. It is best to choose EPF as the saving scheme for a retirement corpus. This way, you can select the best savings instruments that match your personal financial goals after retirement.

If you have any doubts about your finances, feel free to contact Piramal Finance. Piramal Finance works with a pool of financial experts who will help guide you through every doubt and process. To read more about such topics, visit Piramal Finance. I wish you a happy and peaceful life after retirement!