EPF vs PPF: If you want to invest in the savings schemes run by the government, then for this you have the best option like PF or PF. Its interest rates are reviewed from time to time by the government. If seen in true sense, three types of savings schemes are mainly operated by the Employees Provident Fund Organization (EPFO). These include the Employees Provident Fund i.e. EPF, Public Provident Fund i.e. PPF and General Provident Fund i.e. GPF. However, in these three schemes EPF and PPF are very popular for investment. Many times people get confused about these two savings schemes. Come, let us know in detail about the merits of these two savings schemes…
Benefits of investing in EPF
What is the main purpose of EPF :
EPF is one of the savings schemes launched by the government for salaried employees. In companies where more than 20 employees work, the workers of those institutions can avail investment in this savings scheme. The main objective of this government scheme is to deposit funds to meet the needs of the employees after retirement.
How much money does an employee deposit in EPF:
In this scheme, the employer deposits 12 percent of the basic salary and dearness allowance of the employee in the EPF account. In this, the same amount is deposited by the employer as the amount of the employee’s share. 8.65 percent interest rate has been fixed by the government for this savings scheme.
When can the withdrawal of money:
Although, the employee has given the amount deposited in the EPF account by the employer and himself at the time of retirement, but also to meet the needs of sickness, marriage, house building, raising of children etc. Some amount can be withdrawn from PF account. In addition, if you are unemployed for a period of one month, you can withdraw 75 percent of the amount from your EPF account. If unemployment increases for two months, you can withdraw the entire money. However, if you withdraw your money within 5 years of opening the account, then you have to pay tax on withdrawal.
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Tax Benefit:
Under Section 80C of Income Tax Act, investment of up to Rs 1.5 lakh in a year in EPF account is not taxed. This applies to contributions from both the company and the employee. Until you become unemployed, interest on EPF is also exempted from tax. Withdrawal of money from EPF is also not taxed, but the condition is that if you withdraw money after five years of opening an account. If the EPF withdraws more than Rs 50,000 within 5 years from the date of opening the account, the DS will be deducted.
Benefits of investing in PPF
Who can invest:
Public provident fund i.e. PPF is a small savings scheme of the government. This scheme is for those who are not salaried, but want to prepare their retirement fund. Any person can open his PPF account by going to the post office or select banks. In this account, a member has to deposit at least 500 rupees every year.
How much is the interest on PPF :
At present, interest is getting at the rate of 7.9 percent on PPF account. In this account, the member can contribute any number of times in a financial year in a multiplier of 50. Also, a member of the PPF cannot contribute more than Rs 1.5 lakh to his account during a year. A PPF account holder can apply for a loan between the third and sixth year of opening an account.
When can you withdraw money:
You can not withdraw money from PPF account in the face of unemployment. Its maturity period is 15 years. Five years after opening an account, you can withdraw money from PPF. You do not have to give any reason for this. However, the withdrawal limit is fixed.
Loan facility:
Between three years and six years of opening an account, you can take a loan from PPF. The loan can be got only 25 percent of the total amount deposited in the PPF account during the last financial year.
Tax Benefit:
Withdrawal of money before completion of five years from EPF account is taxed, but withdrawal of money from PPF is not taxed.
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