When it comes to building long-term savings in India, two names consistently stand out, EPF (Employees’ Provident Fund) and PPF (Public Provident Fund). Both are government-backed, relatively low-risk options that help you accumulate a significant corpus over time. But if you’re wondering which is better for your long-term financial planning, the answer depends on your employment status, investment goals, and how much flexibility you need.
In this article, we’ll compare EPF and PPF across key parameters like eligibility, returns, lock-in period, tax benefits, and withdrawals. We’ll also explore how tools like the EPF calculator can help you plan better.
What Is EPF?
The Employees’ Provident Fund (EPF) is a retirement savings scheme for salaried employees in companies registered under the EPFO. Both the employee and employer contribute 12% of the basic salary and dearness allowance every month into the EPF account. Over time, this amount earns interest and builds into a retirement corpus.
A portion of the employer’s contribution (8.33%) goes to the Employees’ Pension Scheme (EPS). The remaining 3.67% is added to your EPF balance. The interest rate is set annually by the EPFO and currently stands at around 8.25% (as of FY 2024–25).
You can use an EPF calculator to estimate your total contributions, interest earned, and projected corpus at the time of retirement.
What Is PPF?
The Public Provident Fund (PPF) is a long-term savings scheme open to all Indian residents, including self-employed individuals and those without formal employment. It has a fixed 15-year lock-in and can be extended in blocks of 5 years.
You can invest anywhere between ₹500 and ₹1.5 lakh in a financial year, and the amount earns compound interest, which is declared quarterly by the government. As of 2025, the PPF interest rate is approximately 7.1% per annum.
PPF is known for its tax efficiency, with Exempt-Exempt-Exempt (EEE) status, meaning your contributions, interest, and maturity amount are all tax-free.
EPF vs PPF: A Detailed Comparison
| Feature | EPF | PPF |
| Eligibility | Salaried employees in eligible companies | All Indian residents |
| Contributor | Employee + Employer | Self-contributed |
| Minimum Investment | 12% of salary (mandatory) | ₹500 per year |
| Maximum Investment | No limit (based on salary) | ₹1.5 lakh per year |
| Interest Rate (2025) | ~8.25% (annually declared) | ~7.1% (quarterly declared) |
| Lock-in Period | Until retirement or resignation | 15 years (extendable) |
| Tax Benefits | Section 80C + tax-free interest | Section 80C + tax-free interest + maturity |
| Partial Withdrawal | Allowed under specific conditions | Allowed after 5 years for specific needs |
| Loan Facility | Yes, under certain terms | Yes, between 3rd and 6th financial year |
| Ideal For | Salaried individuals with stable income | Self-employed, freelancers, risk-averse investors |
Which One Should You Choose?
The decision between EPF and PPF largely comes down to your employment type and financial flexibility.
Choose EPF if:
- You are a salaried employee in an EPFO-registered organisation
- You want automatic deductions from your salary to enforce saving discipline
- You’re looking for higher returns backed by employer contributions
- You are planning for long-term retirement benefits, including a modest pension under EPS
Since EPF involves contributions from both the employee and employer, it allows your savings to grow faster than PPF. Moreover, the interest rate is typically higher than PPF, and using an EPF calculator can help you forecast how much you’ll accumulate over 10–30 years.
Choose PPF if:
- You are self-employed, a freelancer, or not part of the organised salaried sector
- You want full control over how much and when to invest (within the ₹1.5 lakh cap)
- You’re looking for a safe, long-term investment that offers tax-free returns
- You want a retirement tool that allows you to make voluntary contributions without any salary-based dependency
PPF is also a great complement to EPF for salaried individuals who want to diversify their retirement portfolio while enjoying additional tax benefits under Section 80C.
Can You Invest in Both EPF and PPF?
Yes, and in fact, many financial advisors recommend doing so. While EPF builds your base retirement corpus through employer-driven contributions, PPF gives you an additional, self-managed layer of long-term savings. Since both qualify for tax benefits and offer safe, fixed returns, combining them allows you to enjoy the advantages of both worlds, higher returns from EPF and tax-free maturity from PPF.
Just be mindful that the combined contributions to both cannot exceed the ₹1.5 lakh deduction limit under Section 80C in any financial year.
Final Thoughts
Both EPF and PPF are excellent instruments for long-term savings, but they serve different purposes depending on your income source and flexibility needs. EPF offers higher returns and employer contributions, making it a powerful retirement-building tool for salaried individuals. PPF, on the other hand, is accessible to all and provides unmatched tax efficiency, especially for those outside the organised workforce. If you’re a salaried professional, EPF will likely form the foundation of your retirement planning, but complementing it with a PPF account can further strengthen your financial security. If you’re self-employed or looking for full control over your savings, PPF is one of the most reliable and tax-friendly investment plans available in India today.