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EPF VS PPF VS VPF: Applicability, Returns, Duration, Tax Benefits Etc.

Nowadays planning regarding retirement is a sought-after topic among people of various age groups. There are a lot of investment options also available, which makes it cumbersome for people to rope into the best retirement option. Recent trends suggest that people are confused and compare EPF vs PPF vs VPF, and then select from these three options.

EPF VS PPF VS VPF: Applicability, Returns, Duration, Tax Benefits Etc.


What Is EPF?

EPF is known as the Employee Provident Fund. It provides financial security and stability in the future. Employees need to save a meager portion of their salaries every month. The savings are used at the time of retirement.

Salaried people working in organizations under the EPFO have to give 12% of their Basic + Dearness Allowance. The employers also have to contribute the same amount. EPF is compulsory for employers who have more than 20 workers and for workers with a basic salary more than Rs. 6,291. The amount earns interest and is also eligible for a tax deduction. EPF is risk-free and is a good investment option for post-retirement.

What Is VPF?

VPF is known as the Voluntary Provident Fund. Under this scheme, an employee can voluntarily give any percent of his or her salary to the PF account. The contribution has to be more than the PF mandate of 12%. It is not an obligation to contribute towards VPF.

An employee can give 100% of his basic salary and DA. Interest is the same as EPF. The amount is credited to EPF scheme account as there is no account for VPF.

What Is PPF?

PPF is better known as the Personal Provident Fund. PPF is guaranteed by the government. It is a fixed income security scheme. It has a special objective of giving old age financial security to the non-salaried employees.

Anybody can contribute to this, and it is risk-free. The interest received on the subscription is compounded. You earn interest on the interest earned. All the balance is exempt from wealth tax.


Citizens belonging to the non-salaried category are applicable to open a PPF account. It can be opened at a bank or in Post Office. The assured high returns are also earned.

VPF and EPF schemes are only available for salaried people. VPF subscribers can contribute any amount over the 12% contributed to their account.

Contribution, Returns, and Tax Benefits:

In VPF and PPF, the contribution is voluntary. Only salaried citizens are allowed to sign for VPF. PPF is for both salaried and non-salaried individuals. An employed individual who needs to increase his retirement savings can tell his or her employer to reduce a certain percentage above the necessary 12% of basic pay and dearness allowance which goes upward towards EPF account.

An employee is also able to contribute 100% of basic pay and dearness allowance towards VPF account. Regarding VPF, the employer is not bound to contribute.

Currently, PPF account provides an interest rate of 8.7%. The interest rates on PPF is connected to government bond yields at a 10-year tenure. This can change based on the market. But these bonds are usually least risky. Returns are generally good. VPF interest rate is not connected to G-bond yield. It is the same as given on EPF account. For the 2014-15 financial year, EPF has set the rate at 8.75%. It is only a little more than PPF rate.

Proceeds of maturity from VPF and EPF are exempted from tax only if the employee has serviced the company for more than five years. If the person leaves before five years, then the returns attract tax. PPF returns are tax-free.

Investment Duration:

For VPF, the amount is paid at the time of resignation or retirement. It can also be transferred from one employer to another, after job switch. The accumulated balance is given to the legal heir on death.

For PPF, the amount is withdrawn on maturity. It is 15 years of the end of the financial year when the product gets linked with an individual.

Withdrawal And Loan Facility:

Only partial withdrawal is allowed when PPF account is maintained for a minimum of 15 years. The account can be increased for an additional five years. But the money from a VPF account is able to be fully withdrawn. If withdrawal from such account happens before completing five years of service with an employer, then it is taxed.

An individual is allowed to apply for a loan and can also withdraw their complete investment for EPF/VPF. In PPF loans, only 50% of the balance at the end of the fourth year can be withdrawn after the start of the sixth year.


EPF vs PPF vs VPF has their own advantages and disadvantages. But EPF and VPF are better than PPF in terms of returns. PPF is also a better choice, as it can be selected by self-employed individuals.

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