EPF vs PPF

Both EPF and PPF are EEE tax instruments — exempt at investment, on interest, and at maturity. But they serve different purposes. EPF is mandatory for salaried employees and comes with employer contribution; PPF is voluntary and open to everyone.

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EPF

Employee Provident Fund — mandatory for salaried employees. Government guarantees 8.25% interest. Employer adds matching contribution (12% of basic salary). Provides pension (EPS) and death/disability cover.

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PPF

Public Provident Fund — voluntary, open to all Indians including self-employed. 15-year tenure with government-backed 7.10% interest. Full EEE tax benefit. Loan available from Year 3.

Feature	EPF	PPF
Interest Rate (FY 2025)	8.25% per annum	7.10% per annum
Who Can Invest	Salaried employees only	Any Indian resident
Employer Contribution	12% of basic salary	None
Employee Contribution	12% of basic (mandatory)	₹500 – ₹1.5L/year (voluntary)
Investment Tenure	Till employment	15 years (extendable by 5yr)
Tax Benefit (Section)	80C	80C
Tax on Interest	Tax-free (up to ₹2.5L/yr contribution)	Tax-free
Tax on Maturity	Tax-free (after 5 years)	Tax-free
Partial Withdrawal	For specific purposes	Allowed from Year 7
Loan Against Balance	Not available	From Year 3 (up to 25%)
Premature Closure	On resignation/retirement	After 5 years (medical/education)

🏆 Verdict

For salaried employees: maximize EPF first — the employer match (free 12% of basic salary) is unbeatable. Then open a PPF for additional tax-free savings. For self-employed professionals, PPF is the best EEE instrument available since EPF is not accessible.

Choose EPF when…

✓You are a salaried employee — EPF is automatic and comes with free employer contribution.
✓You want insurance coverage (death/disability) alongside retirement savings.
✓Your employer contributes to EPS (pension) which provides monthly pension after age 58.
✓You want the higher interest rate (8.25% vs 7.10% for PPF).

Choose PPF when…

✓You are self-employed, freelancer, or business owner — EPF is not available to you.
✓You need a loan against your savings without closing the account.
✓You want to supplement your EPF with additional EEE savings.
✓You want flexibility to extend the corpus in 5-year blocks after 15 years.

Frequently Asked Questions

Can I have both EPF and PPF?

Yes — and you should. EPF is automatic for salaried employees. Opening a PPF account at a post office or bank lets you make additional tax-free investments beyond EPF.

What happens to EPF if I resign?

You can transfer your EPF to your new employer via UAN. If unemployed for 2+ months, you can withdraw 75% (and 100% after 3 months). Let it remain for the interest — it continues to earn 8.25% even after leaving a job.

Is PPF interest taxable?

No — PPF interest is completely tax-free under Section 10(11). This is different from FDs where interest is taxable.

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