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EPF vs PPF: Which is the best way to save money?

EPF VS PPF: How does it work?

One of the major benefits of investing in these plans is that you can start saving some amount. This small amount will become a big number when you will retire. Before you invest in EPF or PPF, it is important to know their pros and cons.  EPF Vs PPF: How does it work?

EPF stands for Employee Provident Fund which is a retirement benefit designed only for salaried employees.  In this scheme, both employer and employee contribute to the EPF account.  In this, you and employer contribute 12% of your basic salary every month.  EPF is handled by the Employee Provident  Fund organization. It is a government body.  According to the rule of EPFO, the employee and the employer contribute a total of 24 percent  of your basic salary to the EPF Account

Important Note:

1. You  can withdraw the amount at the time of retirement or changing job

2. The EPF account can be transferred from one organization to other when an employee changes job.

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PPF  stands for personal provident fund.  It is government –run fixed security scheme. It provides financial security to the people who work in the unorganized sector or who are self-employed. however, a salaried person can also invest in the same. The interest earned on the PPF subscription is compounded. Which means you not only earn the money interest in the amount you have put in, but you will be able to earn interest on interest too.  A person can start investing a mere amount of 500 and invest up to 1,50,000


1. The interest rate of EPF investment is 8.75% while it 8.70% at PPF.

2. One of the major difference is that you can withdraw your EPF when you change a job or you get retired. But in PPF you cannot withdraw your amount till the maturity period. And PPF gets matured after 15 years.

3. An individual can avail loan against PPF.  Where a person can withdraw his or her money for personal use.

4. Returns earned from a PPF account is exempted from tax payment. But if you are investing in EPF, the tax would be deducted under section 80C of the Indian Income Tax, 1961.

5. The EPF can be accessed by salaried people whereas PPF is for the people who are working in organized.

In a nutshell, both the schemes will give you financial stability once you get retired. But if we compare both of them, then EPF is more beneficial than PPF. EPF is more flexible in terms of withdrawal policy and interest rates. If you Self –employed or work in the unorganized sector, you can go for PPF.

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Parul Srivastava

She likes to express herself through her write-ups. She doesn’t believe in doing different things but she enjoy doing things differently.
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