What are the difference between EPF and PPF? Which is better?

Employee Provident Fund (EPF) and Public Provident Fund (PPF) are two major retirement plans backed by the government.

EPF is a great retirement option for individuals who are salaried, while PPF works effectively for self-employed people.

EPF is a mandatory retirement savings scheme for salaried employees. Both the employee and employer contribute a portion of the employee's salary to the EPF account.

PPF is a voluntary long-term investment scheme. It is primarily designed to encourage regular savings.

Both the EPF and PPF have different interest rates. While the current PPF interest rate is 7.1%, the current EPF interest rate is 8.15%.

Under Section 80C of the Income Tax Act, an employee's EPF contributions are deductible from income upto a maximum of Rs. 1.5 lakh per year.

Section 80C allows for a tax deduction on PPF contribution upto Rs. 1.5 lakh every fiscal year. Both the interest received and the maturity sum are entirely tax-free.

The EPF account remains active as long as the person is employed. While the PPF account has a 15-year maturity term.