PPF vs EPF: Both these schemes are a better option to build a retirement fund.
PPF vs EPF: Life after retirement can go on smoothly with happiness, for this it is necessary that you remain financially independent. Retirement planning is also an important aspect of financial planning. Public Provident Fund (PPF) and Employee Provident Fund (EPF) are two such government sponsored schemes, which are a better option to build a retirement fund. EPF is a retirement benefit plan for salaried individuals. In this scheme, both the company and the employee contribute. Employees’ Provident Fund Organization (EPFO) manages this fund. On the other hand, PPF is a scheme designed to provide financial security to all individuals in their old age. PPF account can be opened in designated banks or post offices.
PPF vs EPF: Interest Rates, Who Can Invest
Only salaried individuals ie salaried employees can invest in the EPF scheme. On the other hand, anyone can start investing in the PPF scheme. The annual interest rate on EPF is currently 8.5 percent. At the same time, the government has kept the interest rate on PPF at 7.1 percent for the December quarter.
PPF vs EPF: Minimum investment and lock in period
A PPF account can be opened with a minimum of Rs 500. Whereas, EPF contributes 24 percent of the basic salary, in which 12 percent is contributed by the company and 12 percent by the employee. Withdrawal from EPF can be done on retirement or leaving the company (resignation). Whereas, PPF has a lock-in period of 15 years. It can be extended in blocks of 5 to 5 years.
PPF vs EPF: Loan Facility, Tax Liability and Tax Exemption
You can take loan against PPF account after 3 years. At the same time, loans can be taken against the EPF account for special situations such as medical emergency, house, child education. Withdrawal in PPF is not taxed, whereas in EPF, if you withdraw before 5 years, then tax may have to be paid. At the same time, under section 80C of Income Tax, tax deduction is available on investment in PPF and EPF up to Rs 1.50 lakh.
