| Objective | To provide financial security to an
employee after his service in the
organisation and it is also considered
most reliable retirement corpus | Vs | 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. | Vs | 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 | Vs | 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 | Vs | Investments in smaller and unequal units
or in lump sum can be deposited to PPF
account |
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
employer | Vs | Rs 150,000 per year |
| Interest Rates | Fixed- presently 8.8% p.a. | Vs | Fixed- presently 8.1% p.a. |
Interest Rates
Compounding | Annually | Vs | Annually |
Interest earned is
taxable | No | Vs | No |
| Liquidity | No | Vs | No |
| Tenure | Till retirement age of the employee | Vs | 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. | Vs | 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withdrawn before 5 years of serviceby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 | Vs | Tax Free |
| Premature Withdrawals | Full EPF amount can be withdrawn on
resigning from the job | Vs | Can be withdrawn from 7th financial year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 | Vs | No |
| Risk | No | Vs | Safest Investment |