Difference between PPF, EPF and GPF
Provident fund is government managed fund retirement savings. Employee contribute portion of his/her savings. Provident Fund is a support scheme for retirement. There are three major provident fund accounts available in India:
General Provident Fund or GPF
General Provident Fund or GPF is a saving scheme available to government employees. Government employees contribute a minimum 6% of their salary and become eligible for the accumulated funds at the time of the retirement or superannuation.
Following people can subscribe to the GPF:
- Temporary government employees after the continuous service of one year
- Permanent government employees
- Re-employed pensioners (other than those qualified for Contributory Provident Fund)
GPF is taken care of by the Department of Pension and Pensioner’s Welfare governed by the Ministry of Personnel, Public Grievances and Pensions.
Employee’s Provident Fund or EPF
EPF or Employee’s Provident Fund is government backed savings scheme available to employees in companies with more than 20 workers. Any organization which consists of twenty or more employees is authorized to be registered under the EPF scheme and offer its benefits to its employees. It is mandatory for the companies which have more than 20 employees to open EPF account in employee’s name.
Employer and employee contribute 12% each of the employee’s salary. The Employees Provident Fund Organization (EPFO) takes care of EPF under the Employees Provident Fund and Miscellaneous Provisions Act, 1952.
The minimum lock-in period of EPF account is five years. The partial withdrawal is allowed in some cases such as the construction of house, wedding, medical treatment, loan payment and in case of not getting the salary for two consecutive months.
Public Provident Fund (PPF)
PPF is established by the Central Government. Anyone, either salaried employee or a business employed person can invest by opening a PF account at the State Bank of India or other nationalized banks.
Minimum Rs.500 and maximum of Rs1,50,000 per annum can be deposited under PF account. A certain sum of Interest is credited every year, which can be redeemed after 15 years.
An employer’s contribution towards provident fund is taxable. The interest credited to the provident fund and the retirement payment are tax free.
Difference between EPF, GPF, PPF
| Employees’ Provident Fund (EPF) | General Provident Fund (GPF) | Public Provident Fund (PPF) | |
| Eligibility | Employees working in an organisation with more than 20 employees | Government employees | Indian citizens |
| Maturity | Age of 58 years | Until retirement | 15 years from the date of account creation |
| Premature Close | When the account holder is unemployed for 2 months or more | On suspension or resignation from government service | Allowed after completion of 5 years on a child’s education or medical reasons |
| Tax Exemption | Withdrawal of amount from EPF account after five years of account creation is exempt from tax | tax-free retirement-cum savings scheme | deposits made every year towards PPF is eligible for tax exemption up to Rs.1.5 lakh under Section 80C of the Income Tax Act |
