Difference between Employees Provident Fund (E.P.F) and Public Provident Fund (P.P.F) And the (G.P.F.) General Provident Fund
The Government with a view to secure post-retirement life of employees formed an organization named Employees Provident Fund Organization (EPFO). This organization is responsible for managing Provident fund which aims to secure future with stable returns after retirement or a certain age.
But EPFO is only for salaried individuals, for other professionals, there is a scheme called Public Provident Fund (PPF) which is maintained by Post Office or few specified banks.
In India, there are three types of provident fund
Employee Provident Fund (E.P.F)
Public Provident Fund (P.P.F)
General Provident Fund (G.P.F./V.P.F)
Each type of fund has different features but with the same motto of providing retirement benefits to the contributor.
Let’s see the each scheme individually:
What is Employee Provident Fund (E.P.F)?
The Employee Provident Fund, or provident fund as it is normally referred to, is a retirement benefits scheme that is for organized and unorganized sector (Private Sector) employees.
In case employee wishes to contribute more than the mandatory amount, he can do so by opting for Voluntary Provident Fund (V.P.F). This is beyond employee EPF contribution of 12%. Also, Employee contribution towards VPF does not bound employer to contribute to this VPF. Maximum contribution into VPF can be up to 100% of Basic Salary including Dearness Allowances. This would carry the same rate of interest of E.P.F. The amount would be credited to E.P.F account and there is no separate account for V.P.F.
What is Public Provident Fund (P.P.F)?
PPF is established by the central government to secure future of non-salaried employees, such as consultant, freelancer, contractor etc, even an unemployed person can open P.P.F account with a nominal amount of Rs.100.
What is General Provident Fund (G.P.F)?
General Provident Fund is only for Government Employees. Under this scheme government employees contribute a specific amount which is decided by the Government but there is no contribution from Government side. As per the Govt Service Rules the G.P.F Contribution not less than 6.5% of the total salary ,which can contribute by the employee from his side.
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