EPF and PPF are both government-backed provident funds, but one is tied to a salaried job and the other is open to anyone. EPF is automatic for salaried employees, comes with a matching employer contribution and a rate set annually by the EPFO; PPF is a voluntary 15-year account you fund yourself, capped at ₹1.5 lakh a year, with a rate the government revises every quarter.
The names look almost identical, and that is exactly why they get confused.
EPF vs PPF: the headline numbers
EPF vs PPF: what's the difference?
Both are provident funds with government backing and EEE-style tax treatment, but they serve different people. EPF exists because you are salaried – it is deducted at source and your employer matches it. PPF exists because you chose to open it, salaried or not, and you decide how much to add within the cap. From there, everything else diverges.
EPF
- For salaried employees of covered firms
- 12% from you, matched by 12% from your employer
- Rate set annually by the EPFO
- Withdraw on retirement or job change
- Tax-free after five years of service (EEE)
- Interest on your contributions above ₹2.5 lakh a year is taxable
PPF
- Open to almost any resident individual
- Self-funded, no employer contribution
- Rate revised every quarter by the government
- 15-year lock-in, extendable in 5-year blocks
- Fully tax-free contribution, interest and maturity (EEE)
- ₹500 to ₹1.5 lakh a year
Who can open each?
EPF is not something you opt into casually – it applies automatically once you are a salaried employee at an establishment covered by the EPF rules. PPF is the opposite: you walk into a bank or post office and open it yourself, whether you are salaried, self-employed or not earning at all. That is why the self-employed, who get no EPF, so often make PPF their main provident-fund account.
Contributions and the employer match
This is EPF's structural advantage. You contribute 12% of your basic salary, and your employer adds a matching share – money that only exists because you are on a payroll. PPF has no such match; every rupee is yours. If you are salaried and want to push more into the EPF system beyond the standard 12%, that is what the Voluntary Provident Fund (VPF) is for, and it earns the same EPF rate.
How the interest rate is set
Both rates are government-influenced but set by different bodies on different clocks. EPF's rate is declared annually by the EPFO and has recently been around 8.25%. PPF's rate is part of the small-savings framework the government reviews every quarter, currently near 7.1%. Because they are decided separately, the two rarely line up, and EPF has generally edged ahead of PPF in recent years. Neither is a market return, so treat both as steady rather than high-growth.
| EPF | PPF | |
|---|---|---|
| Who it's for | Salaried employees | Any resident individual |
| Employer match | Yes, 12% | No |
| Rate set | Annually, by EPFO | Quarterly, by government |
| Term | Until retirement or exit | 15 years, extendable |
| Yearly cap | 12% of salary (VPF adds more) | ₹1.5 lakh |
Withdrawal and tax rules
EPF opens for withdrawal on retirement or when you change jobs, with partial withdrawals allowed for a house, medical needs or education. It is tax-free once you have five years of continuous service, but note the twist added in Budget 2021: interest on your own contributions above ₹2.5 lakh in a year is taxable. PPF stays locked for 15 years, allowing partial withdrawal from year seven and a loan from year three, and its maturity is fully tax-free with no similar interest cap.
Related NYVO guides
- What Is EPF? Employees' Provident Fund Explained – the 12%-plus-12% structure, EPFO rate and the ₹2.5 lakh rule in detail.
- What Is PPF? Public Provident Fund Explained – the 15-year term, EEE status and withdrawal timeline.
- Voluntary Provident Fund (VPF): How It Works – how salaried savers top up EPF beyond 12% at the same rate.
EPF and PPF are less rivals than teammates. One arrives with your job and an employer match; the other is open to everyone and fully tax-free at the end. For a salaried person the usual question is not which to keep, but whether to add PPF alongside the EPF that is already running.
