EPF Vs PPF, Interest Rates, Maturity, Partial Withdrawal, Contributions

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EPF investments are meant for salaried individuals.

Employees’ Provident Fund (EPF) and Public Provident Fund (PPF) are two types of retirement savings plans. EPF is a mandatory contribution from the salary of an individual that every organization with more than 20 employees has to deduct. On the other hand, PPF is an optional investment avenue with income tax benefits. EPF is offered by retirement fund body EPFO or Employees’ Provident Fund Organisation while PPF is offered by banks and post offices. Public Provident Fund (Amendment) Scheme, 2016 was introduced by the National Savings Organization in 1968 to mobilize small savings.

Here are 5 things to know about Employees’ Provident Fund (EPF) and Public Provident Fund (PPF):

1. EPF investments are meant for salaried individuals. A PPF account, on the other hand, can be opened by any resident Indian individuals, who may be salaried or non-salaried. However, it cannot be opened by Hindu Undivided Families or HUF.

2. In case of EPF, a subscriber contributes 12 per cent of his/her monthly salary towards EPF kitty. An equal share of 12 per cent is paid for by the employer. Out of the employer’s share 8.33 per cent is invested in Employees’ Pension Scheme or EPS, also run by EPFO, while the balance is invested in EPF. In case of PPF, a minimum of Rs 500 subject to a maximum of Rs 1,50,000 per annum can be deposited. 

3. Currently, Employees’ Provident Fund Organisation (EPFO) offer an interest rate of 8.65 per cent on the EPF deposit. Meanwhile, interest rate on PPF has been fixed at 8 per cent for the current quarter.  The deposits in PPF are compounded on an annual basis.

4. EPF account can be closed while quitting job permanently. It can also be transferred while changing companies till retirement. The PPF account, on the other hand, matures in a period of 15 years. However, on application by the subscriber, it can be extended for one or more blocks of five years each.

5. Partial withdrawal is allowed in case of EPF account under certain circumstances. PPF account also allows partial withdrawal that can be done every year from the seventh financial year from the year of opening account.

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Author: ApnayOnline

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