EPF vs PPF: Key Differences Every Salaried Indian Should Know
Compare Employee Provident Fund (EPF) and Public Provident Fund (PPF) — contributions, interest rates, withdrawal rules, and tax benefits.
EPF vs PPF: Quick Overview
Both EPF and PPF are government-backed savings instruments with tax benefits. But they serve different purposes and have different eligibility, contribution structures, and rules.
| Feature | EPF | PPF |
|---|---|---|
| Who can invest | Salaried employees only | Anyone (including self-employed) |
| Contribution | Mandatory 12% of basic salary | Voluntary, Rs 500-1.5L/year |
| Employer contribution | Yes — 12% of basic | No employer contribution |
| Interest rate (2026) | 8.25% | 7.1% |
| Tax benefit | 80C (employee contribution) | 80C (EEE — triple exempt) |
| Lock-in | Till retirement (partial withdrawal allowed) | 15 years |
| Premature withdrawal | Partial after 5 years; full on job change | 50% after year 7 |
EPF: Employee Provident Fund
EPF is mandatory for employees earning basic salary up to Rs 15,000/month in companies with 20+ employees. Both you and your employer contribute 12% of your basic salary + DA each month.
Your EPF account grows at 8.25% per year (as of 2026). The corpus is accessible on retirement, resignation, or in specific emergencies (medical, housing, education).
All contributions are tax-deductible under 80C. Interest earned is tax-free. Maturity amount is tax-free if withdrawn after 5 years of service.
PPF: Public Provident Fund
PPF is voluntary and available to anyone. You can contribute between Rs 500 and Rs 1,50,000 per year. Interest is 7.1% per year (reviewed quarterly by the government).
PPF has EEE (Exempt-Exempt-Exempt) tax status — contributions are 80C deductible, interest is tax-free, and the maturity amount is tax-free.
The 15-year lock-in is offset by the ability to take loans against PPF (years 3-6) and partial withdrawals (after year 7).
Which Should You Prioritise?
If salaried: EPF contribution is mandatory. Maximise PPF separately for additional tax-free savings.
If self-employed or freelancer: PPF is your primary equivalent. NPS is another option.
For tax saving beyond 80C limit: Consider NPS (additional Rs 50,000 deduction under 80CCD(1B)).
Frequently asked questions
Is PPF better than EPF?
Both have their purpose. EPF has higher interest (8.25% vs 7.1%) and employer contribution, but is only for salaried employees. PPF is available to everyone including self-employed, has a 15-year term, and has EEE tax status.
Can I have both EPF and PPF?
Yes — salaried employees often have EPF through their employer and a separate PPF account for additional voluntary savings.