PPF-EPF-GPF: What Is The Difference Between PPF, EPF, GPF..? What Are The Advantages Between These..?

Currently, there are many types of provident funds. These are used by organizations and individuals to avail of retirement benefits. Public Provident Fund (PPF), Employees Provident Fund (EPF), and General Provident Fund (GPF) are some of the popular funds. Know the difference between these three provident funds.

Public Provident Fund (PPF):

This Public Provident Fund is available to the general public. Can be used by traders, employees ,or professional self-employed persons. Any PAN card holder can open a PPF account for children and adults. There is a facility to deposit up to Rs.1.5 lakh in a financial year. The maturity period of the PPF account is 15 years. It has a facility to extend up to 5 years on maturity.

Benefits of PPF:

The interest rate on PPF is announced by the government on a quarterly basis. It is generally higher than the prevailing fixed deposit (FD) rates. At the time of maturity, the account holder can withdraw the entire amount in one lump sum. Also, this account can be extended for another 5 years. A PPF account holder can take a loan on deposit from the third year to the sixth year. Partial withdrawals are allowed after the completion of the sixth year.

Taxation:

Deposits to PPF accounts are eligible for tax benefits under Section 80C of the Income Tax Act. Maturity amounts are also tax-free.

Employees Provident Fund (EPF):

PDF benefits are available to company employees. Rs per month Private sector companies having more than 20 employees must adopt EPF to provide retirement benefits to employees with a basic salary of up to 15,000. It is optional for employees with higher basic pay. Under EPF an individual contributes 12 percent of the basic salary. The owner will also contribute accordingly. An employee has the option to increase the contribution level beyond 12 percent.

Benefits of EPF:

There are three benefits of EPF. At the time of retirement, one can get a lump sum PF withdrawal, an ordinary pension under Employees Pension Scheme (EPS), and insurance benefits under Employees Deposit Linked Insurance (EDLI). While the employee’s total contribution of 12 percent goes to EPF, the employer’s contribution of 12 percent goes to 8.33 percent to EPS and the remaining 3.67 percent to EDLI. Apart from lump sum benefits at the time of retirement, employees also get regular pensions after retirement and insurance coverage during service. Partial withdrawal from EPF is also allowed for certain purposes. Construction of a house, medical treatment, the marriage of a son, or daughter, etc. Every year the Employees’ Provident Fund Organization (EPFO) announces the interest rate. Currently, this rate is higher than the interest rates offered on PPF and GPF.

Taxation

Employees are entitled to tax benefits under Section 80C of the Income Tax Act. Earlier interest and withdrawals were completely tax-free. However, from the last financial year Rs. Over 2.5 lakh employee contributions have come under the ambit of tax.

General Provident Fund (GPF):

GPF is available to government employees who joined on or before December 31, 2003. They are getting pension benefits under Old Pension Scheme (OPS) for accumulating their retirement corpus. Eligible government employees can contribute a minimum of 6 percent and a maximum of 100 percent of their emoluments. Unlike EPF there is no contribution from the government. Only employees contribute to GPF. That’s why GPF is similar to PPF. But the difference is that GPF is not available to the general public. Now the investment limit in a financial year is Rs. 5 lakhs has been fixed.

Advantages:

Investment in GPF is completely safe as it is a government fund. The interest rate offered is higher than the prevailing FD rates. Money deposited in GPF can be withdrawn in lump sums at the time of retirement. There are partial withdrawal options for certain purposes. This includes house building, medical treatment, child marriage, etc.

Taxation:

GPF is entitled to tax benefits under Section 80C of the Income Tax Act on monies. Earlier, interest earned and maturity amount were tax-free. But in one financial year from last financial year Rs. Taxation of interest is allowed on contributions above 5 lakhs. Now Rs. Amounts above 5 lakhs are not allowed.