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:
|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 It can be withdrawn in case of unemployed.||15 years.|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|Taxation of returns||If withdrawn before 5 years taxable||If withdrawn before 15 years taxable.|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.