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What is the Difference Between EPF, VPF, and PPF? What are Their Tax Benefits?

What is the Difference Between EPF, VPF, and PPF? What are Their Tax Benefits?
  • 27th Apr 2022 |
  • 2,854

Today, retirement planning is one of the major concerns among the youth. The increasing popularity of various retirement schemes and plans is a testament that retirement planning is a hot investment topic for the working youth. It is a smart decision to plan your retirement at the beginning of your career to gain the maximum out of the retirement plans. However, the market offering a heap of retirement plans generally confuses the individual trying to opt for one.

You have plans like Mutual Funds, Equity, NPS, ULIPs, PPF, EPF, VPF, Post Office Schemes, etc., among many other luring options. But for those who are at the beginning of their career, choosing the right option for such a long term can be very tricky. And before a young adult opts for one of these, they must be well-informed and well-prepared to make the right choice and pick the most suitable plan for their future.

One of the most confusing tasks is understanding the comparison: EPF vs. PPF vs. VPF. But fret not; this article will tell you all about PPF vs. VPF vs. EPF and how they differ from one another.

EPF vs VPF vs PPF | Definition and Working

1. Employee Provident Fund (EPF)

EPF is a provident fund created to provide financial stability and security to the employees of an organization in the long term, i.e. after retirement. As per the norms of this fund, employees can save a fraction of their basic salary each month. This fund can then be used by the employees later in their retirement.

As per the government regulations, it is mandatory for all working employees of organizations registered under EPFO (Employees’ Provident Fund Organization) to contribute as much as 12% of their basic + DA (Dearness allowance) or as much as ₹780/- towards the EPF. In addition to this, as soon as the employee deposits their contribution, the employer is liable to add the same amount to his EPF account.

EPF = 12% of basic from employee income + Employers contribution (12% of employee’s basic)

For organizations having more than 20 full-time employees, it is mandatory to participate in EPF. Other regulations are important too and must be read about. In addition to this, there are tax benefits linked to EPF, and they also earn you a decent interest and are a completely risk-free investment tool.

2. Voluntary Provident Fund (VPF)

In this type of Provident Fund, the applicant can voluntarily contribute any percentage of their salary to the fund account as per their wish. However, the PF contribution must be above the minimal 12% ceiling as per the government’s mandate.

The contribution in VPF is not obligated as it depends on the employee’s discretion. However, the interest offered would be the same as the EPF decided by the governing body and will be credited into the EPF account at maturity.

3. Public Provident Fund (PPF)

This is the PF scheme for the common person! Backed by the government, anyone working or non-working can invest in PPF. It is one of India’s most popular traditional savings schemes, which offers good returns, tax benefits, and safety. The main goal of the PPF is to help any individual make small savings and earn decent interest in them.

One can opt for the PPF schemes at any bank or post office. You can make small deposits as less as ₹500/- per annum to ₹1,50,000/- per annum.

Difference between VPF and PPF and EPF

Here are some of the key differences between EPF, PPF, and VPF, based on important criteria:




Interest Rate

8.75% per annum

8.75% per annum

8.7% per annum

Tax Benefit

Deductions of up to ₹1.5 lakhs per year under Sec 80C of IT Act

Deductions of up to ₹1.5 lakhs per year under Sec 80C of IT Act

Deductions of up to ₹1.5 lakhs per year under Sec 80C of IT Act

Period of Investment

Retirement/ Resignation whichever is earlier

Retirement/ Resignation whichever is earlier

15 years

Loan Availability

Partial withdrawals allowed


After 6 years allows 50% withdrawal

Employer Contribution on Basic + DA




Employee Contribution on Basic + DA




Taxation on Maturity Returns




Each plan brings along its share of pros and cons. Having understood the nitty-gritty of each scheme, you can prudently determine your retirement needs and opt for a plan that best aligns with your future goals.

Kotak e-Term Plan


  • Nominal Cost
  • Multiple Plan Options
  • Flexible Payout Options
  • Critical Illness Rider
  • Tax Savings
  • Long term Coverage

Ref. No. KLI/22-23/E-BB/492


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