Quick answer: EPF is the employer-linked retirement fund for salaried staff: 12% from the employee and 12% from the employer (part to pension), earning 8.25% for 2025-26. PPF is a voluntary government scheme open to any resident: ₹500 to ₹1.5 lakh a year, a 15-year lock-in, earning 7.1% (October–December 2026). EPF pays more and gets an employer match; PPF is fully tax-free with no income limits on interest, and open to the self-employed. For most salaried people, EPF first, PPF as a top-up.
EPF and PPF sound alike and both are "provident funds", but they work very differently. One comes with your job and is deducted through payroll; the other is an account you open and fund yourself. They also differ in returns, tax, lock-in and who can join. This guide compares EPF and PPF side by side, with current rates and the 2026 rule changes, and helps you decide how to use each. For how EPF works in payroll, see our PF guide.
What is EPF?
The Employees' Provident Fund (in Hindi, कर्मचारी भविष्य निधि) is a retirement savings scheme for employees of establishments covered by the Code on Social Security, run by EPFO under the EPF Scheme, 2026. Every month the employee contributes 12% of PF wages and the employer contributes 12%; for EPS members, 8.33% of wages up to the ₹25,000 ceiling (a maximum of ₹2,083) goes to the pension scheme and the rest to EPF. The balance earns interest declared each year and is paid out on retirement or exit, with partial withdrawals allowed for set needs.
What is PPF?
The Public Provident Fund (लोक भविष्य निधि) is a long-term savings scheme of the Government of India, under the PPF Scheme, 2019. Any resident individual can open one account at a post office or authorised bank, including for a minor. You deposit between ₹500 and ₹1.5 lakh each financial year, in one or more instalments. The account matures after 15 years and can be extended in blocks of five years. Interest is set every quarter by the Finance Ministry.
EPF vs PPF: side-by-side comparison
| EPF | PPF | |
|---|---|---|
| Who can join | Employees of covered establishments | Any resident individual |
| Run by | EPFO | Finance Ministry, via post offices and banks |
| Contribution | 12% of PF wages each from employee and employer, through payroll | ₹500 to ₹1.5 lakh a year, voluntary |
| Interest rate | 8.25% for 2025-26 (set yearly) | 7.1% for Oct–Dec 2026 (set quarterly) |
| Lock-in | Until retirement or exit; partial withdrawals after 12 months | 15 years; partial withdrawals from year 7 |
| Employer contribution | Yes | No |
| Pension | Linked EPS pension for eligible members | None |
| Tax on interest | Tax-free within limits | Fully tax-free |
| Loan | No loan; partial withdrawal instead | Loan from year 3 to year 6 |
| Portability | Moves with you through UAN | Account stays yours; can be transferred between bank and post office |
Returns: EPF vs PPF rates
EPFO's Central Board of Trustees fixed EPF interest at 8.25% for 2025-26 in March 2026, the third year at that rate, and the government ratified it in June 2026 (Outlook Money). PPF pays 7.1% for October to December 2026, the rate it has paid since April 2020 (small savings rates).
EPF has paid between about 8.1% and 8.8% over the past decade, ahead of PPF. Add the employer's matching contribution, and EPF builds a much larger corpus for the same take-home sacrifice. PPF's advantages are government backing and full tax exemption. Use our EPF calculator and PPF calculator to compare.
Example: ₹1 lakh a year for 15 years
Suppose you put ₹1 lakh at the start of each year for 15 years, and rates stay where they are today. In PPF at 7.1%, the ₹15 lakh deposited grows to about ₹27.1 lakh. The same deposits earning the EPF rate of 8.25% would grow to about ₹30 lakh. The real gap is wider, because in EPF the employer adds its own share every month: an employee on PF wages of ₹25,000 contributes ₹3,000 a month, and the employer adds ₹917 to EPF (plus ₹2,083 to the pension scheme). Rates are not fixed for 15 years, so treat these as illustrations, not forecasts.
How interest is worked out
PPF: interest is calculated monthly on the lowest balance between the close of the fifth day and the end of the month, and credited at the end of the financial year. A deposit made by the 5th earns interest for that month; one made on the 6th does not. For a lump sum, deposit by 5 April to earn interest for the full year.
EPF: interest is worked out on the monthly running balance and credited once the year's rate is notified, usually months after the year ends. Contributions come through payroll, and the employer must deposit them by the 15th of the following month (see our PF challan due date guide).
What happens when you change jobs or move abroad
Job change: EPF stays with you through your Universal Account Number (UAN). The new employer links your existing UAN, and the old balance should be transferred, so that service is continuous for tax and pension. Cashing out EPF on every job change breaks compounding and can make withdrawals taxable. PPF is not affected by job changes at all.
Becoming an NRI: an existing PPF account can continue until maturity, but it cannot be extended after that, and an NRI cannot open a new PPF account. EPF can be withdrawn in full on leaving India permanently, or left to earn interest within the scheme's rules. Our PF applicability guide covers who must join EPF in the first place.
Tax: EPF vs PPF
EPF is tax-efficient but not unlimited:
- Employee contributions qualify for the deduction in the old regime only.
- Interest on employee contributions above ₹2.5 lakh a year (₹5 lakh where the employer does not contribute) is taxable.
- Employer contributions to EPF, NPS and superannuation above ₹7.5 lakh a year in total are taxable.
- Withdrawal before five years of continuous service is generally taxable, unless for reasons such as ill health or closure of business, and TDS applies where such a withdrawal exceeds ₹50,000.
PPF is exempt at all three stages: deposits qualify for the deduction (old regime only), interest is tax-free, and the maturity amount is tax-free. In the new regime there is no deduction for either, but EPF interest within the limits and all PPF interest remain tax-free. These rules continue under the Income-tax Act, 2025.
Lock-in and withdrawals
EPF, under the EPF Scheme, 2026: partial withdrawal reasons are grouped into three categories, with a uniform 12-month membership condition. You can withdraw up to 75% of the balance, keeping 25% as a minimum balance while employed. If you become unemployed, you can take 75% at once and the remaining 25% after 12 months of continuous unemployment. Full withdrawal is allowed on retirement at 55 or later, after 12 months of unemployment, permanent disability, retrenchment, voluntary retirement or leaving India permanently.
PPF: one partial withdrawal a year is allowed from the seventh financial year, limited to 50% of the balance at the end of the fourth preceding year or the previous year, whichever is lower. Loans are available from the third to the sixth year. Premature closure is allowed after five years only for specified reasons such as serious illness or higher education, with interest reduced by 1%.
See our PF withdrawal fact check for the latest on EPFO's digital withdrawal plans.
EPF vs PPF vs VPF, GPF and other options
- VPF: Voluntary Provident Fund lets an employee put more than 12% into EPF and earn the EPF rate. Our VPF vs PPF guide compares the two in detail.
- GPF: the General Provident Fund is for government employees covered by it; its rate is set quarterly and is usually in line with PPF.
- Sukanya Samriddhi (SSY): for a girl child's account, currently paying 8.2%, with a deposit deduction in the old regime.
- ELSS: equity-linked tax-saving mutual funds with a three-year lock-in; returns are market-linked, not guaranteed.
Which suits you?
| Your situation | What usually works |
|---|---|
| Salaried, covered by EPF | Keep EPF as the base; add PPF for tax-free, separate savings |
| Salaried, high income | EPF up to the tax-free limits; PPF for extra tax-free interest |
| Self-employed or not covered by EPF | PPF as the core guaranteed savings |
| Want more than 12% in PF | VPF, keeping your own contributions within ₹2.5 lakh a year so the interest stays tax-free |
| Saving for a child | PPF in the child's name, or SSY for a daughter |
Rates and limits change, and your choice depends on your income, tax regime and goals. This is general information, not financial advice; a qualified adviser can help with your situation.
Compare your own numbers. Use the free EPF calculator and VPF calculator to see what your EPF could grow to, and how extra contributions compare with PPF.
Frequently asked questions
Which is better, EPF or PPF?
For a salaried employee, EPF usually comes first: it pays a higher rate (8.25% for 2025-26 against 7.1% for PPF), and the employer adds a matching contribution. PPF suits self-employed people, those not covered by EPF, and employees who want a separate, fully tax-free long-term account with a government-backed rate. Many people use both.
Is EPF and PPF the same?
No. EPF (Employees' Provident Fund) is a retirement fund for salaried employees, run by EPFO, with contributions from both employee and employer through payroll. PPF (Public Provident Fund) is a government savings scheme that any resident individual can open at a bank or post office and fund voluntarily.
What is the EPF interest rate and the PPF interest rate now?
EPF earned 8.25% for 2025-26, the third year at that rate, credited after government approval in June 2026. PPF pays 7.1% for October to December 2026, the rate it has paid since April 2020. EPF is set once a year by EPFO's board; PPF is set every quarter by the Finance Ministry.
Can I have both EPF and PPF accounts?
Yes. EPF and PPF are separate, and a salaried employee can hold both. Only one PPF account is allowed per person in their own name, but EPF continues alongside it through the employer.
Is EPF better than PPF for tax?
Both are largely tax-free, but EPF has limits: interest on employee contributions above 2.5 lakh rupees a year is taxable, employer contributions to EPF, NPS and superannuation above 7.5 lakh rupees a year are taxable, and withdrawal before five years of service can be taxed. PPF interest and maturity are fully tax-free, though its deposit deduction is available only in the old regime.
Can I withdraw from EPF and PPF early?
From EPF, after 12 months of membership you can make partial withdrawals of up to 75% of the balance under the EPF Scheme, 2026, keeping 25% as a minimum balance. From PPF, partial withdrawals are allowed from the seventh financial year, loans from the third to sixth year, and premature closure after five years only for specified reasons.
Position as of 15 November 2026. EPF rate for 2025-26 as ratified in June 2026; PPF rate for October–December 2026; EPF withdrawal rules under the EPF Scheme, 2026; tax rules under the Income-tax Act, 2025. Rates are revised periodically. General information, not financial or tax advice.