Understand the Difference Between GPF, EPF and PPF

Gaurav Seth
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Gaurav Seth

With the growing trend of being financially aware, retirement planning is a term that is most talked about even among people who are in their twenties. With so many investment alternatives available in the market, it is becoming a complex process for investors to come down to an ideal option. Going by the low-risk average return rule, investors mostly consider GPF, EPF, and PPF to secure their future financially after retirement. In this article, we will discuss in detail these three alternatives and understand the difference.

GPF - General Provident Fund

This PF scheme is only available for government employees. An individual becomes a member of the scheme by contributing some percent of his/her salary towards the account. This contribution is not made by the employer i.e. the government but only by the employee. He/she can make a monthly contribution to this account during the tenure till his/her retirement. Three months before the retirement date, the contribution to the scheme is stopped in advance and when the employee retires, the final balance amount is release in his account on an immediate basis.  

  1. Contribution Rate:

The percent for the contribution is fixed by the investor himself. This rate should not be less than 6% of the employee’s total salary and the maximum contribution can be 100% of his salary.

2. Withdrawal and Maturity:

An investor can withdraw funds from his GPF account only after completion of 10 years of service or within 10 years before the date of retirement, whichever is earlier. The withdrawal can be done only on specific grounds that are pre-defined. If an employee leaves the service, he/she becomes eligible to withdraw the balance from his GPF account irrespective of the tenure.

Talking about maturity, the GPF account matures at the age of superannuation/ retirement of the employee. In case of the unfortunate demise of the subscriber, the GPF amount will be paid to the nominee/beneficiary.

3. Taxation:

GPF scheme is a tax-free retirement option. Thus, the contributions, interest accrued along with maturity proceeds from this scheme are exempt from taxes under Section 80C of the Income Tax Act, 1961.

EPF - Employee Provident Fund

EPF is a retirement savings scheme managed by the Employee Provident Fund Organization under the supervision of the Government of India. The scheme helps the individuals to save a good corpus for meeting their post-retirement needs through regular contributions into the account. Firms having a workforce of over 20 individuals need to compulsorily initiate an EPF account in their names. Both the employee and employer make identical contributions to the account. The minimum lock-in tenure is 5 years. 

1. Contribution: 

As mentioned, both employer and employee are required to contribute to such an account. The standard contribution from both sides is 12% of the salary which comprises basic pay and dearness allowance. 

2. Partial Withdrawal:

Partial Withdrawal is only allowed in specific cases such as reconstruction or purchase of a house, the marriage of a daughter, self, son, etc, loan repayment, medical treatment of family members, etc. Also, in case of unemployment for more than 1 month, the employees are eligible to withdraw 75% of the corpus. And in the case of unemployment for more than 2 months, the employees can withdraw the rest 25% for the balance. 

3. Maturity:

In absence of the above-mentioned cases, investors can withdraw the corpus on the retirement date only. 

4. Taxation:

If an investor withdraws the balance amount from his EPF account after 5 years of account initiation, it is exempt from tax. In addition, contributions made every year up to Rs 1,50,000 are eligible for tax benefits under Section 80C of the Income Tax Act, 1961.

PPF - Public Provident Fund

Public Provident Fund (ppf) is a saving scheme backed by the sovereign guarantee of the Indian government. All Indian citizens are eligible to initiate a PPF account either in their own capacity or on behalf of a minor. The lock-in tenure of the account is 15 years which can be extended for 5 years further. The account can be opened in the branches of the post office and across authorized banks.

1. Contribution:

The contributions to PPF account can be made via lump sum or installment mode of payment. A PPF subscriber can make a maximum of 12 contributions per year. The subscriber needs to make a minimum contribution of Rs 500 every year to keep the account active. Nevertheless, the maximum cap is set at Rs 1,50,000 in any financial year.

2. Partial Withdrawals:

The request for partial withdrawal is entertained only after the completion of 5 years  from the account initiation date. The subscriber can withdraw up to 50% of the balance at the end of the 4th financial year or the balance in the previous year, whichever is lower,

3. Loan Facility: 

The investor can also apply for a loan against his balance after the completion of 1 year from the end of the financial year in which the account was opened. The upper cap of the loan against the account is 25% of the total balance at the end of the proceeding year. The applicant can take only one loan in a financial year. If the loan is paid back within 3 years, then an interest rate of 1% p.a. will be applicable. And if it is paid back after 3 years, then interest will be 6% p.a.

4. Taxation:

The contributions made every year towards a PPF account are eligible for claiming tax deductions of up to Rs 1,50,000 under Section 80C of the Income Tax Act, 1961. Moreover, the interest accrued on the balance amount along with the maturity value is exempt from taxation. 


Eligibility  Only govt employeesIndividuals working in any organization with more than 20 employeesAny Indian Citizen
Maturity Until Retirement Age of 58 years15 years from the date of account initiation
Interest Rates7.1%8.5%7.1%
Premature WithdrawalsAllowed after 10 years for meeting pre-defined expenses.In case of  unemployment for 1 or months and for meeting specified expenses.Allowed after completion of 5 years for child’s education or other medical reasons.

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