What are the difference between EPF and PPF? Which is better?
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Employee Provident Fund (EPF) and Public Provident Fund (PPF) are two major retirement plans backed by the government.
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EPF is a great retirement option for individuals who are salaried, while PPF works effectively for self-employed people.
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EPF is a mandatory retirement savings scheme for salaried employees. Both the employee and employer contribute a portion of the employee's salary to the EPF account.
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PPF is a voluntary long-term investment scheme. It is primarily designed to encourage regular savings.
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Both the EPF and PPF have different interest rates. While the current PPF interest rate is 7.1%, the current EPF interest rate is 8.15%.
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Under Section 80C of the Income Tax Act, an employee's EPF contributions are deductible from income upto a maximum of Rs. 1.5 lakh per year.
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Section 80C allows for a tax deduction on PPF contribution upto Rs. 1.5 lakh every fiscal year. Both the interest received and the maturity sum are entirely tax-free.
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The EPF account remains active as long as the person is employed. While the PPF account has a 15-year maturity term.
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