New Delhi: Old tax regime taxpayers will do well to know the benefits of EPF and PPF, key schemes that offer Income Tax benefits and deductions. EPF is offered by the Employee Provident Fund organisation while PPF is offered by Post offices as well as private and public sector banks.
EPF is a social security scheme offered by the government of India for the salaried class under a component of the basic salary deducted compulsorily. PPF is a voluntary contribution scheme which allows a minimum contribution of RS 500 and caps these at Rs 1.50 lakh.
EPF vs PPF interest rates
EPF offers an 8.25 per cent annual interest rate compared to a 7.1 per cent annual interest rate.
EPF interest rate is fixed by the EPFO board on an annual basis, while PPF interest rates are revised on a quarterly basis by the finance ministry.
EPF vs PPF tax benefits
EPF tax benefits up to Rs 1.50 lakh are deductible under Section 80C of the Income Tax (I-T) Act.
PPF investments up to Rs 1.50 lakh are eligible for deduction under the I-T Act.
If an amount greater than Rs 50,000 is withdrawn from PF within 5 years of service it is liable to 10 per cent tax deduction at source
EPF vs PPF minimum and maximum contribution
The minimum EPF contribution should be 12 per cent of the salary capped at Rs 15,000 per month or Rs 1.80 lakh.
Minimum PPF contribution starts at Rs 500 per month capped at Rs 1.50 lakh per annum.
EPF vs PPF account maturity
EPF account matures when a salaried individual attains 58 years of age
PPF matures in 15 years from date of opening
PPF account can be extended in 5-year blocks for an unlimited amount of time by submitting form 4 within 1 year of the maturity date
How to open EPF and PPF accounts
PPF accounts can be opened with any bank in online or offline mode.
To open a PPF account, you are required to furnish proof of identity, address proof, and passport-size photo.
To open an EPF account, you must share your PAN and Aadhaar with the employer along with a cancelled cheque of the account in which you seek to receive the refund.
EPF vs PPF: Salaried taxpayers will do well to know the interest rates and tax benefits offered by these 2 schemes. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
