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 January 26 is a bank holiday in Andaman And Nicobar Island due to Republic Day.
2017 February 01 is a bank holiday in Andaman And Nicobar Island due to Saraswati Puja (Shree Panchami)/Basant Panchami.
2017 February 10 is a bank holiday in Chandigarh due to Guru Ravidas's Birthday.
2017 February 15 is a bank holiday in Manipur due to Lui Ngai-Niw.
|AB Bank Ltd||ABN-AMRO Bank N.V||Abu Dhabi Commercial Bank||Airtel Payments Bank Limited||Allahabad Bank||American Express Banking Corp||Andhra Bank||Antwerp Diamond Bank NV||AXIS Bank||Bandhan Bank Limited||Bank Of America||Bank Of Bahrain & Kuwait B.S.C||Bank Of Baroda||Bank Of Ceylon||Bank Of India||Bank Of Maharashtra||Bank Of Nova Scotia||Bank Of Tokyo Mitsubishi Limited||Barclays Bank||Bharatiya Mahila Bank||BNP Paribas||Calyon Bank||Canara Bank||Catholic Syrian Bank Limited||Central Bank Of India||Chinatrust Commercial Bank Limited||Citi Bank||City Union Bank Limited||Corporation Bank||DBS Bank Ltd||DCB Bank Limited||Dena Bank||Deutsche Bank||Dhanalakshmi Bank||Equitas Small Finance Bank Limited||Exim Bank Export Import Bank Of India||Federal Bank||HDFC Bank||HSBC Bank||HSBC BANK OMAN SAOG||ICICI Bank||IDBI Bank||IDFC Bank Limited||Indian Bank||Indian Overseas Bank||IndusInd Bank||Jammu And Kashmir Bank Limited||JP Morgan Bank||JSC VTB Bank||Karnataka Bank Limited||Karur Vysya Bank||Kotak Mahindra Bank Limited||Krung Thai Bank Public Co. Ltd||Laxmi Vilas Bank||Mashreqbank Psc||Mizuho Corporate Bank Limited||Oman International Bank SAOG||Oriental Bank Of Commerce||Punjab And Sind Bank||Punjab National Bank||RBL Bank Limited||SBM Bank Mauritius Limited||Shinhan Bank||Societe Generale||Sonali Bank||South Indian Bank||Standard Chartered Bank||State Bank Of Hyderabad||State Bank Of Patiala||State Bank Of Bikaner And Jaipur||State Bank Of India||State Bank Of Mysore||State Bank Of Travancore||Syndicate Bank||Tamilnad Mercantile Bank Limited||The Nainital Bank Limited||UBS AG||UCO Bank||Union Bank Of India||United Bank Of India||Vijaya Bank||Yes Bank Limited|