PPF Vs EPF Decoded: Can An Employee Maintain Both Provident Fund Accounts? – News18

A provident fund (PF) is a financial savings scheme particularly designed to assist individuals accumulate funds for his or her retirement. By beginning a PF and taking a proactive strategy to retirement planning, you’ll be able to guarantee a safe and comfy future after your working years.

Planning for retirement reduces monetary stress and uncertainty, offering peace of thoughts and figuring out that there are funds accessible to assist oneself and family members throughout retirement.

Provident Funds in India, corresponding to EPF and PPF, function important instruments for retirement planning, serving to people construct a monetary cushion to assist themselves throughout their retirement years and guaranteeing a snug and safe way of life publish-employment.

Types of provident funds:

The two primary kinds of Provident Funds in India are the Employee Provident Fund (EPF) and the Public Provident Fund (PPF), every with its options and laws. Apart from these, also referred to as the General Provident Fund, the GPF scheme applies to authorities staff (central and state), together with native our bodies and railways. Similar to the EPF, each the worker and the federal government contribute in direction of the GPF.

PPF vs EPF: Can an worker preserve each PF accounts?

Yes, an worker can preserve each a PPF account and an EPF account concurrently. However, it’s important to know the variations between the 2:

EPF is a compulsory scheme with employer contributions, whereas PPF is a voluntary scheme with tax advantages and a hard and fast rate of interest. An worker can profit from each by contributing to their employer-sponsored EPF and in addition opening their very own PPF account to save lots of extra funds for retirement.

EPF (Employee Provident Fund):

• EPF is a compulsory financial savings scheme for workers in India, ruled by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
• Both employer and worker contribute 12% of the worker’s primary wage (capped at a sure restrict) in direction of the EPF.
• It is managed by the Employees’ Provident Fund Organisation (EPFO), which is beneath the purview of the Ministry of Labour and Employment.
• Both the employer and the worker contribute in direction of the EPF account, usually a proportion of the worker’s primary wage plus dearness allowance.
• EPF primarily serves as a retirement financial savings scheme, offering a lump sum quantity to staff upon retirement or resignation.
• The rate of interest is said by the federal government yearly and is at the moment at 8.25%. (This price can fluctuate barely from yr to yr)

PPF (Public Provident Fund):

• PPF is a voluntary lengthy-time period funding scheme provided by the Government of India.
• Individuals can contribute between Rs. 500 and Rs. 1.5 lakh per yr.
• It is open to all Indian residents and isn’t tied to employment. Individuals can open a PPF account via designated banks or publish workplaces.
• PPF accounts have a maturity interval of 15 years, which may be prolonged in blocks of 5 years indefinitely.
• Contributions made to PPF accounts are eligible for tax advantages beneath Section 80C of the Income Tax Act, and the curiosity earned is tax-free.
• The rate of interest is mounted for the complete tenure of the account and is at the moment at 7.1%. (This price can be declared quarterly by the federal government and might change)

Since PPF and EPF serve totally different functions and have totally different options, a person can preserve each accounts concurrently. However, the contributions to EPF are usually tied to employment and are made by each the employer and the worker, whereas contributions to PPF are voluntary and made solely by the account holder.

Disclaimer: The views and funding ideas by specialists on this News18.com report are their very own and never these of the web site or its administration. Readers are suggested to verify with licensed specialists earlier than making any funding choices.