For most Indian salaried employees, EPF and PPF form the bedrock of retirement savings — both offering safety, government backing, and generous tax benefits. But they work very differently. EPF is automatic and employment-linked; PPF is voluntary and universal.
EPF and PPF at a Glance
| Feature | EPF | PPF |
|---|---|---|
| Full Form | Employee Provident Fund | Public Provident Fund |
| Who Can Invest | Salaried employees only | Any Indian resident |
| Managed By | EPFO | Banks / Post Offices |
| Interest Rate | 8.25% (FY 2025-26) | 7.1% (Q1 FY 2026-27) |
| Contribution | 12% of Basic (mandatory) | ₹500–₹1.5L/year (voluntary) |
| Lock-in | Until retirement/job change | 15 years |
| Tax Status | EEE | EEE |
| Partial Withdrawal | Allowed for specific reasons | From Year 7 (50% of balance) |
Interest Rate Comparison
| Year | EPF Rate | PPF Rate |
|---|---|---|
| FY 2021-22 | 8.10% | 7.10% |
| FY 2022-23 | 8.15% | 7.10% |
| FY 2023-24 | 8.25% | 7.10% |
| FY 2024-25 | 8.25% | 7.10% |
| FY 2025-26 | 8.25% | 7.10% |
Tax Treatment — Both Are EEE
- E1 — Investment Exempt: Both EPF and PPF contributions are deductible under Section 80C (employee EPF + PPF — up to ₹1.5L total).
- E2 — Interest Exempt: Interest earned on both EPF (up to ₹2.5L annual contribution) and PPF is fully tax-free.
- E3 — Maturity Exempt: EPF withdrawal at retirement (after 5 years of service) is fully tax-free. PPF maturity corpus is fully tax-free.
Withdrawal Rules
- EPF — Full withdrawal at retirement (age 58) or upon resignation after 2 months of unemployment.
- EPF — Partial withdrawal allowed for: medical expenses, home purchase, marriage, education.
- PPF — Full withdrawal only at maturity (after 15 financial years).
- PPF — Partial withdrawal from 7th year: maximum 50% of balance.
- PPF — No premature full closure except for special circumstances (higher education, life-threatening illness).
Which Should You Choose?
- Choose EPF + VPF if: You are salaried and want automatic, high-interest retirement savings with employer matching.
- Choose PPF if: You are self-employed, a homemaker, or a business owner without EPF access.
- Use both if: You are salaried and want to maximise guaranteed retirement savings. EPF through employer + PPF top-up is the gold standard for conservative retirement planning.