What is PF and PPF?

Created on 07 Jun 2019

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Updated on 10 Sep 2022

Provident Fund (PF) is a savings scheme started by the government of India for retired salaried people of India. As per the part of this scheme, a group of people comes together to invest money in an account which is later given back to the individual when he retires.

Usually, PF is given to a salaried employee and is a requisite which is addressed by the employer. In PF, a certain amount of the employee’s salary is deposited each month in the account, and the same amount of money is deposited by the employer as well.

Provident Fund is of different types, which are as follows:

  1. Employee Provident Fund: As the name suggests, in EPF, the employee regularly invests a certain portion of his salary to the fund. A group of people comes together to invest money in EPF, which is invested in the trust. The fund amount is paid on maturity or when the individual wants.
  2. Statutory Provident Fund: This fund is for those employees who work for the educational sector, government sector, or universities.
  3. Unrecognized Provident Fund: This fund is started between the employee and the employer, but, UPF is not recognized by the income tax department of India.
  4. Public Provident Fund: This fund is open for self-employed individuals and children. The individual need not be salaried in this case.

Eligibility for PF

Anybody who is earning a salary and can regularly contribute a certain portion of income towards EPF, SPF, and UPF. The investor must be a resident of India.

Benefits of PF

The main motto of PF is to provide benefits to the members of the fund when they retire from service. The fund also proves to be highly beneficial if the employee meets with serious illness or is retrenched or dies off while still working.

Public Provident Fund: It is a type of provident fund which is availed by self-employed individuals.PPF is a saving fund with many tax-saving benefits along with many promising returns. A minimum deposit value of Rs. 500 is expected to be deposited to open an account, and the maximum amount can go up to Rs. 1.5 lakh. 

If the investment value is above 1.5 lakh per annum, then, the investor is not entitled to earn any relaxation/rebate under income tax.

Eligibility for PPF

The investor must be a citizen of India. Any Indian citizen who can regularly contribute to this fund is eligible for PPF. It is a part of the Provident Fund (PPF) unlike PF, which is a savings account.

Benefits of PPF

PPF is one of the most popular investment cum saving schemes opted in India. Here, are some of the most sought after benefits of investing in PPF.

  • 100% guaranteed returns: It is a risk-free investment where you get 100% risk-free returns. It is run by the Government of India, so it is reliable for getting back complete returns.
  • Tax benefit: It is a EEE scheme which stands for Exempt-Exempt-Exempt tax status. It is one of the rarest schemes of India, and you get a tax exemption of 1.5 lakhs which is deducted from your taxable income. You have to stay invested in this scheme for 15 years, and the interest earned is also non-taxable.
  • High returns: You get a high return of 7.6%, which gets compounded annually. The return rate is revised constantly.
  • Withdrawal flexibility: The tenure of investment is 15 years, post-which, either you can withdraw the entire amount, or you can extend the investment period for another 5 years.

Differences between PF and PPF

S. No




It is a savings fund account.

It is a part of the provident fund.


It has different types of accounts.

It is a type of provident fund.


It is for the salaried individual.

It is for the self-employed individual as well as children.


Both employer and employee contribute towards this.

The only investor contributes money to this.


The funds can be withdrawn before maturity against a price.

The funds can be withdrawn before 15 years without any price.

To know about the latest 2020 updates on PPF, Read PPF New Rules and How you can benefit from it.

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Koushik Mohan has completed MBA from National institute of securities markets (SEBI), with 1.6years of experience working with Northern Trust and CA firm in the departments like OTC derivatives and Accounting.

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