Today we will discuss the difference between the employee provident fund commonly known as EPF and the public provident fund commonly known as PPF. Both are Indian central government schemes and both are very good saving schemes.
employee provident fund (EPF):
As the name suggests, EPF is a fund for the employees and here the employees, as well as employers, need to contribute to the EPF account of employee. As per the present rule both employee and employer need to contribute 12% of their basic salary plus dearness allowance per month. Besides this, an employee can contribute more and for this, he or she has to submit an application as per prescribed proforma. The tax benefit up to 1.5 lac can be availed under section 80 C of the income tax act.
Public Provident Fund or PPF:
As the name suggests, PPF is for the public that may be in a job, private or government or in business. The PPF account holder needs to open a PPF account in designated banks or in the post office. The minimum amount that can be deposited is Rs. 500 per financial year and maximum Rs. 1.5 lac per financial year. One can take the benefits of income tax rebate under section 80 C of income tax act maximum up to Rs. 1.5 lac. The benefit of PPF is that even the interest received is exempted from income tax. The tenure of PPF is 15 years. So, one should start to invest early in his or her age and we would suggest opening the account with your first job or business and hold it for 15 years for long-term gain.
These are the major differences between EPF and PPF. Thus, if you are not having benefits of EPF then open a PPF account for long term wealth creation.