What is the difference between GPF, EPF and PPF?

Last Updated at: Jan 16, 2020
What is the difference between EPF, GPF, PPF

There are several saving schemes offered by the government which includes GPF, EPF, and PPF. Knowing about the interest rates and the benefits of saving schemes would be of great help to employees and common people. You must know about the employer and employee contribution to the above saving scheme.

Let us further read to understand the differences.

The full form of GPF is General Provident Fund. GPF is a savings scheme which is available to government employees. The full form of EPF is the Employees Provident Fund. EPF is a savings scheme which is available to employees in the companies with more than twenty workers. The full form of PPF is Public Provident Fund. PPF is available to everyone regardless of being employed, self-employed or unemployed.

The government of India offers numerous saving schemes including PPF, EPF and GPF. Each of these schemes have varying interest rates and advantages and are helpful for employees and individuals. Also, there will be different contributions from both employers and employees. Understand more about these different saving schemes from below.

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A provident fund is mainly a saving scheme aimed to build a reliable retirement corpus in the form of a lump sum amount during the time of the retirement. Provident fund principally provides financial security to the old people. EPF is generally available to salaried people in the organized sector and contributions to the fund are made by both the employees and the employers. In some situations, even the state makes some contribution to the fund. However, there are also some kinds of provident funds in which individuals having business income can invest such as PPF. GPF, on the other side, is only available to government servants.

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The investment in these provident funds (GPF, EPF and PPF) is a comparatively low risk due to their statutory or government backing. Out of these three funds, the government directly pays interest on PPF and GPF. In the case of the EPF, the interest rate depends on the returns made by the EPF. The rate of the EPF is 8.55% while the rates of the GPF and the PPF are both 8%. The deduction of taxes according to the section 80C is accessible for the GPF, the EPF and the PPF. The interest in all these three investments is tax-free.

General Provident Fund (GPF)

GPF is wholly available for government employees. People employed with the Indian Government contribute a minimum of 6% of their salary and are eligible for the accumulated funds at the time of the retirement or superannuation.

All the temporary government employees after the continuous service of one year, all the permanent government employees, and all the re-employed pensioners (other than those qualified for Contributory Provident Fund) are required to subscribe to the GPF mandatorily. GPF is taken care of by the Department of Pension and Pensioner’s Welfare governed by the Ministry of Personnel, Public Grievances and Pensions. The subscriber online login is available for GPF where you will have to provide your GPF no. and DOB to process further.

GPF online

Employee Provident Fund (EPF)

EPF is the government-backed saving scheme which offers a social security net to the employees working in the structured sector. Any organization consisting of twenty or more employees is authorized to be registered under the EPF scheme and offer its benefits to its employees. The Employees Provident Fund Organization (EPFO) takes care of EPF under the Employees Provident Fund and Miscellaneous Provisions Act, 1952.

Apart from the long term retirement corpus, an EPF adherent is also eligible for a pension under the Employees Pension Scheme (EPS). If the adherent has completed 10 years of cumulative service under the EPF registered organizations, he/she will be eligible for EPS.

Public Provident Fund (PPF)

PPF is again a government-guaranteed long term savings cum tax saving provident fund which was launched in 1968 under the Public Provident Fund Act, 1968. However, contrasting the GPF and EPF, both salaried, as well as self-employed people having business income, can subscribe for PPF. Also, it should be kept in mind that enrolling under PPF is completely a deliberate decision of the subscriber. While the subscription under GPF and EPF is compulsory for the eligible employee. Department of Economic Affairs takes care of PPF under the Ministry of Finance.

Only the investor makes contributions towards PPF. One can start with the minimum investment of Rs.500 and go up to Rs.1.5 lakh annually. This can be in order to avail tax benefits under Section 80C of the Income Tax Act, 1961. One can also make contributions to PPF as in lump sum or in a maximum of 12 instalments per year. A clear understanding of EPF, GPF, PPF saving schemes would be of great help for employees. The above article gives a clear idea of the taxation and interest rates of the above saving schemes. Invest in the above saving schemes based on your need.