Money Talks- Part 6- EPF and PPF

Provident Fund is another common investment option but used interchangeably for EPF and PPF.  Both are similar in few aspects but not same.

  • EPF stands for employee provident fund and is applicable for salaried individuals.
  • PPF stand for Public Provident fund which anyone can put investment into.

Both are long term investment options and offer less liquidity.

  • Returns on both of them are announced yearly/ quarterly by Government bodies.
  • Return you will receive in investment is not known in advance as it keeps on changing Quarterly/ yearly and the maturity of this instrument extends for longer period. However in the past 5-6 years the returns have ranged around 8% plus/minus 1%.
  • Both give you the benefit of Sec-80 C deduction on the amount invested and the return is also exempt provided you are holding it for min 5 years in case of EPF. PPF partial withdrawals are permitted post 7th year .

Snapshot of both these instruments is as  below:

  EPF PPF
Who Salaried Anyone
Frequency Monthly deduction from salary Min once in a year.
Tenor Retirement. It can be withdrawn in case of unemployed. 15 years.
Withdrawal Permitted for specified usage Permitted from 7th financial year.
Max withdrawal Upto 90% Upto 50%
Taxation of returns If withdrawn before 5 years taxable If withdrawn before 15 years taxable.

 

Government is considering increasing giving the option of increasing equity contribution for EPF on which more clarity should come post March-19.

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