When it comes to saving to build a handsome retirement corpus, in order to lead the same life as today, after we are relieved from all our duties, EPF and PPF are the best among all the alternatives. They are considered the best because they generate guaranteed returns that are tax free too and its long term investment with lock-in-period does not let you discontinue or withdraw the amount before the maturity.
The restriction with EPF is that it is available to only salaried persons and the non employees, business men, professional or any other person does not get this facility. EPF is a fixed contribution in which a certain percentage of the employee's salary is deducted and credited to the employee's provident fund account and employer also contributes some amount. It is deducted till the employee retires.
PPF account can be opened by anyone among salaried employee, self-employed, businessman, professional or any other person. It is backed by Central Government. It also offers to make a lump sum investment in addition to invest in instalments maximum upto Rs 1.5 lakh per annum.
The main difference between PPF and EPF that you need to look at which might help solve the confusion are given in below comparison table:
|Basis of Difference||Employees Provident Fund (EPF)||Public Provident Fund (PPF)|
|Objective||To provide financial security to an|
employee after his service in the
organisation and it is also considered
most reliable retirement corpus
|To avail tax rebate under sec 80C of|
Income Tax on deposits with guaranteed
returns on investment
|Meaning||A fixed contribution which is a certain|
percentage of the employee's basic
salary plus D.A. is credited to the
employee's provident fund account by the
employee alongwith some contribution
that is made by the employer to the
employee's EPF account.
|A long-term saving instrument|
established by the central government
which generates tax-free maturity to
provide the old-age income security
|Eligibility||Only salaried individuals|
|Salaried employee, self-employed,|
businessman, professional or any other
person can open it
|Investible amount||12% of the employee's basic salary plus|
D.A. and contribution of 3.67% of the
employee's basic salary plus D.A. is
also made by the employer
|Investments in smaller and unequal units|
or in lump sum can be deposited to PPF
|Maximum Investment Amount||Fixed which is 12% of the employee's|
basic salary plus D.A. and an equal
contribution is also made by the
|Rs 150,000 per year|
|Interest Rates||Fixed- presently 8.8% p.a.|
|Fixed- presently 8.1% p.a.|
|Interest earned is|
|Tenure||Till retirement age of the employee|
|15 Years, can further be extended in|
multiples of 5 years
|Income Tax Rebate u/s 80C||Yes, upto Rs 1,50,000/- p.a.|
|Yes, upto Rs 1,50,000/- p.a.|
|Maturity||Tax Free, but in case the PF amount is|
withdrawn before 5 years of serviceby
employee on resigning from the job then
the amount will be taxable
|Premature Withdrawals||Full EPF amount can be withdrawn on|
resigning from the job
|Can be withdrawn from 7th financial year|
onwards from the opening of the account
and only one partial withdrawal is
allowed every financial year
|Tax Deduction at Source||No|
2017 February 24 is a bank holiday in Chandigarh due to Mahashivratri.
2017 February 27 is a bank holiday in Sikkim due to Losar.
2017 March 03 is a bank holiday in Mizoram due to Chapchar Kut.
2017 March 12 is a bank holiday in Jammu And Kashmir due to Holi (Jammu Province Only).