PPF vs EPF: Which Is Better? Rate, Tax, Limits and Withdrawal
Short answer: EPF currently pays more (8.25% for FY 2025-26) than PPF (7.1% for October to December 2026), but only salaried employees get EPF, and it comes with an employer contribution. PPF is open to anyone, allows up to ₹1.5 lakh a year and locks money for 15 years. If you put ₹3,600 a month in each for 15 years, PPF gives about ₹11,36,042 and EPF about ₹12,49,497, at those rates.
Side by side
| PPF | EPF | |
|---|---|---|
| Interest rate | 7.1% (Oct–Dec 2026), set every quarter | 8.25% (FY 2025-26), set every year |
| Who can invest | Anyone, with an account at a bank or post office | Salaried employees covered by the EPF scheme |
| How much | ₹500 to ₹1.5 lakh a year | 12% of basic + DA from you, 12% from your employer (part to pension); more as VPF |
| Employer contribution | None | Yes |
| Lock-in | 15 years, extendable in 5-year blocks | Until retirement; advances for specific needs, and the rules have changed recently |
| Tax | Interest and maturity tax-free | Interest tax-free on your contributions up to ₹2.5 lakh a year |
The same ₹3,600 a month for 15 years
The EPF figure is higher because of its higher rate, about ₹1,13,455 more in this example. Over the 15 years you deposit ₹6.48 lakh, so PPF interest is about ₹4.88 lakh and EPF interest about ₹6.01 lakh. But rates change, so the gap can narrow or widen. Try your own numbers with the PPF calculator and the EPF calculator.
What the table does not show
- The employer’s share. With EPF, your employer adds another 12% of your basic salary and DA, though part of it goes to the pension scheme. That makes EPF a bigger saving than the rate alone suggests.
- Flexibility. PPF lets you choose how much to deposit each year. EPF is deducted from your salary at a fixed percentage, and you can add more through VPF.
- Access. PPF allows a loan from the 3rd to the 6th financial year and partial withdrawals from the 7th. EPF withdrawals depend on rules that EPFO has changed recently, so check them before you plan.
A practical plan for a ₹50,000 basic salary
With a basic salary of ₹50,000, your own EPF contribution is 12%, which is ₹6,000 a month. If you also pay ₹5,000 a month into PPF, then after 15 years, at 8.25% and 7.1% held constant, your own EPF contributions grow to about ₹20.82 lakh and your PPF to about ₹15.78 lakh, about ₹36.6 lakh in total, before counting your employer’s EPF share. If you want to save more in EPF, you can raise your contribution through VPF, but remember the ₹2.5 lakh yearly limit for tax-free interest.
Can you have both?
Yes. Many salaried people have EPF through their job and also a PPF account for extra tax-free savings. Remember that the PPF deposit counts for the 80C deduction only in the old regime. See our guide on Section 80C.
Which should you prefer?
- If you are salaried, EPF happens automatically, and it is usually worth topping up with VPF if the rate stays high.
- If you are self-employed, or want more tax-free saving beyond your EPF, PPF is a good fit.
- If you want a higher return and can accept risk, look at NPS or mutual funds, remembering that returns are not guaranteed.
To understand the EPF rate in more depth, see EPF interest rate 8.25%.
Keep reading
- EPF Interest Rate 8.25%: History, Calculation and What It Means — EPF and retirement, 6 min read
- EPF Wage Ceiling Raised to ₹25,000: What It Means for Your PF — EPF and retirement, 5 min read
- Section 80C Explained: What You Can Claim Up to ₹1.5 Lakh — Income tax, 6 min read
- CTC vs In-Hand Salary: Why Your Take-Home Is Less Than Your CTC — Salary and tax, 6 min read
Frequently asked questions
Which is better: PPF or EPF?
EPF has the higher rate and an employer contribution, but only salaried employees get it. PPF is open to anyone and is tax-free with a 15-year lock-in. Many people use both.
What is the PPF interest rate now?
7.1% for the October to December 2026 quarter. The government reviews it every quarter.
Is EPF interest tax-free?
On your own contributions up to ₹2.5 lakh a year, yes. Interest on contributions above that limit is taxable.
Can I invest in PPF if I already have EPF?
Yes. There is no rule against it, and you can deposit up to ₹1.5 lakh a year in PPF.
Sources: National Savings Institute — Public Provident Fund · All India Radio — EPFO notifies 8.25% interest for FY 2025-26 · EPFO