The government runs provident fund schemes to secure the financial future of all sections. There are three types of these – Employee Provident Fund (EPF), Public Provident Fund (PPF) and General Provident Fund (GPF). A small part of the earnings has to be deposited in all three. Then it is returned in the form of a large amount. Let us know everything about these three funds in detail.
The government wants to secure the economic future of all sections of the country. For this, it also runs many schemes. The most important among these is the Provident Fund, which is also called PF in common parlance.
There are three types of PF – Public Provident Fund (PPF), Employee Provident Fund (EPF) and General Provident Fund (GPF). Many people get confused in differentiating between these three funds.
Let us tell you what is the difference between these three PFs, who are they for, how is money invested in them and how much interest is received.
Public Provident Fund (PPF)
As the name suggests, this PF is for the general public. Any Indian citizen, including a working or business person, can take advantage of it. This can be opened in post offices or banks. A minimum of Rs 500 and a maximum of Rs 1.5 lakh can be deposited in it annually.
PPF matures in 15 years. Then it can be extended for 5-5 years. It gives compound interest i.e. your interest amount is also added to the original investment and then you get annual interest on that too. Currently, the government gives 7.1 percent interest on it.
In this, exemption is also available under section 80C of Income Tax on investment of Rs 1.5 lakh annually.
Employee Provident Fund (EPF)
EPF is for employees of private sector companies having more than 20 workers. A fixed portion of the employee’s salary is deposited in it and the company also contributes the same amount. However, only 3.67 percent of the company’s share goes into EPF. The remaining 8.3 percent goes to the Employee Pension Scheme (EPS).
After retirement, employees get the PF amount in lump sum. At the same time, EPF money is received as pension. The interest rate on EPF for the financial year 2023-24 has been fixed at 8.25 percent. This is much higher than many saving schemes.
General Provident Fund (GPF)
GPF is only for government employees. It opens accounts of temporary and permanent employees who work continuously for one year for the government. Employees have to contribute at least 6% of their salary to GPF, provided they are not suspended. Then after retirement they get a lump sum amount.
Another big benefit of this account is that if needed, the employee can withdraw a fixed amount from GPF and deposit it later. There is no tax on this. Currently, 7.1 percent interest is being given on GPF.
