What is PPF Account? Difference Between PPF, EPF & EPS Account [Explained]

What is PPF Account | Difference Between PPF, EPF & EPS Account | PPF Account Calculator | PPF Account Online

A PPF Account is a type of investment that is specifically designed to offer income security in retirement. It is a savings and investment scheme established by the Indian government. A person can start investing in this scheme with a minimum of Rs. 500 and a maximum of Rs. 1,50,000 and earn significant tax-free returns. The PPF scheme is exclusively available to Indian citizens.

PPF Account

Difference between PPF and EPF Account

The Public Provident Fund (PPF), is a government-sponsored savings plan. Everyone is welcome to participate, whether they are employed, self-employed, jobless, or retired. It is not compulsory, and anyone can contribute any amount to the PPF up to Rs 1.5 lakh each year, subject to a minimum of Rs 500 and a maximum of Rs 1.5 lakh. It has a quarterly fixed return that is regulated by the government. A PPF account can be opened at the post office or at most major banks. Every quarter, the PPF interest rate is reviewed. PPF interest rates are currently at 7.1 percent.

EPF, or Employees’ Provident Fund, is sometimes referred to as PF. It is a government-sponsored savings plan for organized-sector employees. Every year, the EPFO (Employees Provident Fund Organisation), a statutory agency established under the Employees’ Provident Fund Act, 1956, announces the EPF interest rate. The interest rate on the EPF account has been set at 8.50 percent for the current fiscal year. Employees of companies that are registered under the EPF Act are the only ones who can invest in the EPF or PF. Every month, both the employer and the employee must contribute 12% of the employee’s basic salary and dearness allowance to the EPF account.

SBI PPF Account


  • Due to legislative protection, both are safe. EPF, on the other hand, is riskier due to its equity exposure.
  • Both the EPF and the PPF are government-sponsored savings plans.
  • The EPFO, a statutory agency, manages the EPF, whereas the government manages the PPF directly.
  • Every year, the EPFO invests 15% of the new money it receives in shares. The remainder is held in government bonds.
  • Every year, the EPFO announces the EPF rate based on the EPF corpus returns. The EPF rate is currently 8.50 percent, whereas the PPF rate is currently 7.1 percent. The EPF rate has historically been slightly higher (8.65%) than the current rate FY 2020-21 and the current PPF rate.
  • The EPF, on the other hand, is exposed to market fluctuations due to its equity exposure. A market crash could make it harder for the EPFO to keep the EPF interest rate stable.

PPF returns are set by the government and are guaranteed. Every quarter, the exact rate is determined. In the past, rates have fluctuated approximately 8% per year. The interest rate for the second quarter of FY 2021-22 (July-September) has been set at 7.1 percent.

NPS Scheme


EPF has a higher liquid content. Withdrawals from PPF are only permitted when the account has been open for 5 years.

EPF Withdrawal

  • If you have been unemployed for one month, you are eligible to withdraw 75% of your EPF account. If you are unemployed for more than two months, you can withdraw your whole EPF account. However, if you take your EPF corpus within five years after creating your account, the withdrawal would be taxable.
  • Even if you become unemployed, self-employed, or work in the unorganised sector, you can simply leave the money in your EPF account. The EPF balance will continue to accrue interest in this instance, but it will be taxable. The account will stop collecting interest after three years.
  • The retirement age for the EPF is 58 years old. You can withdraw most of your corpus after you reach this age. However, a portion of the EPF corpus used for the Employees’ Pension Scheme (EPS) would be given to you as a pension. This is taxable.
  • Partially withdrawing from the EPF is also possible. You must, however, identify the reason for the withdrawal, and the amounts removed cannot be used for any other purpose. You don’t have to pay back the money you took out. In common terminology, these partial withdrawals are referred to as EPF loans. However, the facility that is available is only for partial withdrawal. There are several reasons for partial withdrawal, and each one has a different time limit. 

SBI Pension loan

PPF Withdrawal

  • You cannot withdraw money from a PPF account if you are unemployed. PPF accounts have a 15-year duration. After the 6th year has passed and the 5th year has begun from the year of account opening, you can make partial withdrawals from your PPF account without giving any explanation. The partial withdrawal is, however, limited.
  • Additionally, it is recommended that one consult the bank’s website to see whether partial withdrawals are permitted. Withdrawals are permitted after 5 years in some banks, such as ICICI and Axis, and after 7 years in others (SBI and HDFC).
  • The lesser of the following amounts is the maximum amount that can be withdrawn every financial year:
    • 50 percent of the account balance at the end of the previous financial year, or
    • 50 percent of the account balance at the end of the fourth financial year, prior to the current year.

From the third to the sixth year following account opening, you can acquire a loan against the balance in your PPF account. The maximum loan amount available against PPF accounts is 25% of the balance at the end of the second financial year preceding the year in which the loan is requested.


If you take your EPF money before you’ve completed 5 years of service, you’ll have to pay taxes on it. Withdrawals from a PPF are not taxable.

Investments in the EPF are eligible for a tax deduction of up to Rs 1.5 lakh per year under Section 80 C of the Income Tax Act. This is true of both the employer’s and the employee’s contributions. Unless you become unemployed, the interest on your EPF is likewise tax-free. Withdrawals from the EPF are likewise tax-free if they are made within 5 years of the account being opened. TDS is deducted from the withdrawal amount if it is more than Rs 50,000 within 5 years of the EPF account being opened.

Under Section 80 C of the Income Tax Act, 1961, you can deduct up to Rs 1.5 lakh per year in PPF contributions. PPF interest is also tax-free, although it must be reported on the annual income tax return. The amount invested in a PPF at maturity is similarly tax-free. To put it another way, PPF is tax exempted.

Income Tax Deductions 

PPF Account Disadvantages

  • Partially withdrawing from a PPF account before the 5-year anniversary of the account inception is not permitted. Even if you are unemployed or need money for a family emergency, you cannot withdraw from the PPF before this time. The PPF has a 15-year term, which is very long, and it has typically paid a lower interest rate than the EPF.
  • The PPF rate is fixed, and it can provide significantly lower returns over time than equity-linked vehicles such as mutual funds and NPS (National Pension System).

EPF’s Disadvantages

  • Employees of companies that have registered under the EPF Act are eligible for EPF. This refers to businesses with 20 or more employees. It does not apply to self-employed or retired people.
  • The EPF contribution is set at 12% of pay and DA from both the company and the employee. Although you can contribute more to VPF, you cannot contribute less than this amount (Voluntary Provident Fund)
  • Withdrawals made before 5 years from the date the EPF account was opened are taxed. Many workers in today’s market can’t hold a job in an EPF-registered firm for more than 5 years.
  • You cannot contribute to the EPF if you change positions from large to small enterprises or become self-employed. The EPF will stop collecting income three years after you leave the EPF-registered workplace in this situation. Your money will be sitting in your EPF account, unused.
  • The EPF rate may fall short of mutual funds or the National Pension System’s long-term returns (NPS)

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