New Delhi: People nowadays are looking to invest their money in schemes instead of keeping it in the bank. The schemes help them to increase their wealth thanks to the rate of interest which compounds the money. Among the many schemes in this country, the EPF and PPF have emerged as crucial instruments to invest.

While EPF stands for Employees’ Provident Fund, the PPF stands for Public Provident Fund. These two investment schemes are extremely important for working people. In this article, we will take a look at the two instruments of investment.

What is EPF?

The Employees’ Provident Fund Organisation (EPFO) manages the EPF as per the Employees’ Provident Fund and Miscellaneous Act, 1952. The EPF is a compulsory deduction from the salaries of employees whose organisations are enrolled under this. The employee contributes a certain amount from the salary and the employer shall also contribute a certain amount to the fund.

What are the benefits of the EPF?

• The EPF helps employees to save and accumulate a significant sum of money for their retirement.
• The EPF can only be availed by an employee who is working in a company that employs more than 20 individuals. However, companies which do not have 20 employees can also opt to offer EPF benefits.
• In the EPF, both the employee and the employer contribute a certain amount of money, which is 12 per cent of the basic salary.
• An employee will have the EPF account till retirement and can only draw money from an EPF account when the person is out of employment for over 2 months. Also, in the EPF, the maturity amount is tax-free but only after 5 years.

What is PPF?

The full form of PPF is the Public Provident Fund. Like the EPF, the PPF is also backed by the government. It is a popular tax-saving investment option under Section 80C. However, unlike the EPF, the PPF is a voluntary investment scheme.

What are the benefits of the PPF?

• Unlike the EPF, any Indian citizen residing in the country, employees and self-employed individuals can open a PPF account. Also, Indian citizens who opened their PPF accounts here can operate it from abroad.
• A person can maximum of 12 contributions to a PPF account in a year. Also, a PPF account holder has to deposit a minimum of Rs 500 per year. The maximum deposit in a year is Rs.1.5 lakh.
• The maturity tenure of a PPF account is 15 years and an account holder can choose to extend it by a block of 5 years from thereon.
• The PPF has tax exemption under Section 80C for all contributions made in a particular year subject to a maximum of Rs 1.5 lakh