Compare EPF, VPF, and PPF on interest rates, tax benefits, withdrawal rules, and returns. Learn which provident fund combination works best for your savings goals.
EPF, VPF, and PPF—three similar-sounding options that confuse most Indian investors. All are safe, government-backed, and offer tax benefits. But they serve different purposes.
Here's a clear comparison to help you choose.
Quick Comparison
| Feature |
EPF |
VPF |
PPF |
| Full Form |
Employee Provident Fund |
Voluntary Provident Fund |
Public Provident Fund |
| Interest Rate |
8.25% |
8.25% |
7.1% |
| Who Can Open |
Salaried employees |
EPF account holders only |
Any Indian resident |
| Employer Contribution |
Yes (12%) |
No |
No |
| Maximum Contribution |
12% of Basic + DA |
Up to 100% of Basic + DA |
₹1.5 lakh/year |
| Lock-in |
Until retirement/resignation |
Until retirement/resignation |
15 years |
| Tax Status |
EEE* |
EEE* |
EEE |
*EEE with conditions (contributions above ₹2.5L/year taxable on interest)
Calculate your returns: Use our EPF Calculator and PPF Calculator.
Understanding Each Fund
Employee Provident Fund (EPF)
EPF is a mandatory retirement savings scheme for salaried employees in organizations with 20+ employees.
| Aspect |
Details |
| Your contribution |
12% of Basic + DA (mandatory) |
| Employer contribution |
12% of Basic + DA (3.67% to EPF, 8.33% to EPS) |
| Interest rate (2025-26) |
8.25% per annum |
| Who manages |
EPFO (Government body) |
Key advantage: Your employer matches your contribution—effectively doubling your savings at zero extra cost.
Voluntary Provident Fund (VPF)
VPF is an extension of EPF that lets you contribute more than the mandatory 12%.
| Aspect |
Details |
| Eligibility |
Must have an EPF account |
| Contribution limit |
Up to 100% of Basic + DA |
| Interest rate |
Same as EPF (8.25%) |
| Employer contribution |
None (voluntary on your part only) |
| Account |
Deposits into same EPF account |
Key advantage: Same 8.25% interest as EPF, higher than PPF's 7.1%.
Public Provident Fund (PPF)
PPF is a voluntary long-term savings scheme open to all Indian residents.
| Aspect |
Details |
| Eligibility |
Any Indian resident (including minors via guardian) |
| Minimum contribution |
₹500/year |
| Maximum contribution |
₹1.5 lakh/year |
| Interest rate (2025-26) |
7.1% per annum |
| Lock-in period |
15 years |
Key advantage: Complete EEE status (tax-free at every stage) and no upper limit on service years.
Interest Rate Comparison
| Fund |
Current Rate |
5-Year Average |
Volatility |
| EPF |
8.25% |
8.35% |
Very low (revised annually) |
| VPF |
8.25% |
8.35% |
Same as EPF |
| PPF |
7.1% |
7.5% |
Quarterly revision |
Historical Interest Rates
| Year |
EPF |
PPF |
| 2025-26 |
8.25% |
7.1% |
| 2024-25 |
8.25% |
7.1% |
| 2023-24 |
8.15% |
7.1% |
| 2022-23 |
8.10% |
7.1% |
| 2021-22 |
8.10% |
7.1% |
EPF consistently offers 1%+ higher returns than PPF.
Tax Benefits Comparison
Contribution Phase (Section 80C)
| Fund |
Tax Deduction |
Limit |
| EPF |
Yes (employee portion) |
Within ₹1.5L 80C limit |
| VPF |
Yes |
Within ₹1.5L 80C limit |
| PPF |
Yes |
Within ₹1.5L 80C limit |
All three compete for the same ₹1.5 lakh Section 80C limit.
Interest Earned
| Fund |
Tax on Interest |
Condition |
| EPF |
Tax-free up to ₹2.5L contribution |
Interest on excess is taxable |
| VPF |
Same as EPF |
Combined EPF + VPF ≤ ₹2.5L |
| PPF |
Fully tax-free |
No upper limit |
Withdrawal Phase
| Fund |
Tax on Withdrawal |
Condition |
| EPF |
Tax-free |
If 5+ years of service |
| VPF |
Tax-free |
Same as EPF |
| PPF |
Tax-free |
Always |
The ₹2.5 Lakh Rule for EPF/VPF
From April 2021, interest on EPF/VPF contributions above ₹2.5 lakh per year is taxable at your slab rate.
| Annual Contribution |
Tax-Free Interest |
Taxable Interest |
| ₹2 lakh |
On full amount |
None |
| ₹3 lakh |
On ₹2.5 lakh |
On ₹50,000 |
| ₹5 lakh |
On ₹2.5 lakh |
On ₹2.5 lakh |
Impact: VPF loses some tax advantage for high contributors.
Example: ₹5 Lakh Annual EPF + VPF
| Component |
Amount |
| Total contribution |
₹5,00,000 |
| Tax-free interest earned (8.25% on ₹2.5L) |
₹20,625 |
| Taxable interest earned (8.25% on ₹2.5L) |
₹20,625 |
| Tax @ 30% slab |
₹6,187 |
| Effective return on excess |
~5.8% |
PPF has no such restriction—all interest is tax-free regardless of contribution amount.
Withdrawal Rules Comparison
Before Maturity
| Fund |
Partial Withdrawal |
Conditions |
| EPF |
Yes |
Medical emergency, housing, education, marriage |
| VPF |
Yes (with EPF) |
Same conditions as EPF |
| PPF |
Yes (from 7th year) |
Max 50% of balance at end of 4th year |
Full Withdrawal
| Fund |
When Allowed |
Tax Treatment |
| EPF |
Retirement, resignation (2 months gap), or unemployment |
Tax-free if 5+ years service |
| VPF |
Same as EPF |
Same as EPF |
| PPF |
After 15 years maturity |
Always tax-free |
Loan Facility
| Fund |
Loan Available |
Interest Rate |
| EPF |
No |
— |
| VPF |
No |
— |
| PPF |
Yes (Years 3-6) |
PPF rate + 1% |
₹1 Lakh Investment: 20-Year Comparison
Assuming ₹1 lakh invested annually for 20 years:
| Fund |
Interest Rate |
Corpus |
Difference |
| EPF/VPF |
8.25% |
₹50.4 lakh |
+₹6.3 lakh |
| PPF |
7.1% |
₹44.1 lakh |
Baseline |
EPF/VPF creates 14% more wealth over 20 years.
Including Employer Contribution (EPF Only)
| Scenario |
Your Contribution |
Employer Adds |
Total Corpus |
| EPF |
₹1 lakh/year |
₹37,000/year* |
₹68.5 lakh |
| PPF |
₹1 lakh/year |
₹0 |
₹44.1 lakh |
*Employer contributes 12%, of which 3.67% goes to EPF (rest to pension).
With employer match, EPF creates 55% more wealth than PPF.
Who Should Choose What?
Choose EPF If
| Criteria |
Why EPF |
| You're a salaried employee |
Mandatory anyway, but leverage the employer match |
| Want steady, predictable returns |
8.25% is higher than most debt options |
| Need emergency liquidity |
Withdrawals allowed for specific needs |
Choose VPF If
| Criteria |
Why VPF |
| Already maxing PPF (₹1.5L) |
VPF gives 8.25% vs PPF's 7.1% |
| Total EPF + VPF ≤ ₹2.5 lakh/year |
Full tax benefits applicable |
| Want simple auto-deduction |
Deducted from salary like EPF |
| Not interested in equity/NPS |
Prefer guaranteed returns |
Choose PPF If
| Criteria |
Why PPF |
| Self-employed (no EPF access) |
Only provident fund option |
| Want 100% tax-free returns |
No ₹2.5L cap on tax-free interest |
| Contributing > ₹2.5L to EPF+VPF |
PPF interest is fully exempt |
| Need loan facility |
Available from year 3-6 |
| Building child's corpus |
Open for minors via guardian |
Avoid VPF If
| Criteria |
Why Avoid |
| Contributing > ₹2.5L already |
Interest becomes partially taxable |
| Want higher growth |
NPS/ELSS can give 10-12% |
| Need flexibility |
15+ year lock-in with employer dependency |
Optimal Allocation Strategy
For Salaried Employees (₹1 lakh Basic)
| Fund |
Monthly |
Annual |
Purpose |
| EPF (mandatory) |
₹12,000 |
₹1,44,000 |
Base retirement savings |
| VPF |
₹6,000 |
₹72,000 |
Top up to ₹2.5L limit |
| PPF |
₹6,000 |
₹72,000 |
Tax-free component |
| Total |
₹24,000 |
₹2,88,000 |
|
For Self-Employed
| Fund |
Monthly |
Annual |
Purpose |
| EPF/VPF |
Not available |
— |
— |
| PPF |
₹12,500 |
₹1,50,000 |
Max out for tax-free returns |
| NPS |
₹4,167 |
₹50,000 |
80CCD(1B) additional benefit |
For High-Income Salaried (₹2 lakh+ Basic)
| Fund |
Strategy |
Reason |
| EPF |
Accept mandatory 12% |
Employer match is free money |
| VPF |
Don't contribute extra |
Already above ₹2.5L limit |
| PPF |
Contribute ₹1.5L |
Fully tax-free, diversification |
| NPS |
Contribute ₹50K |
80CCD(1B) extra deduction |
Common Mistakes
Mistake 1: Ignoring VPF Entirely
| Situation |
Mistake |
Better Approach |
| EPF contribution ₹1L/year |
Not using VPF |
Add VPF up to ₹2.5L total |
| Why? |
Leaving 8.25% returns on table |
PPF only gives 7.1% |
Mistake 2: VPF Over ₹2.5L Limit
| Situation |
Mistake |
Better Approach |
| EPF + VPF = ₹4L/year |
Interest partially taxable |
Cap at ₹2.5L, put rest in PPF |
| Why? |
~30% tax eats into returns |
PPF interest is fully exempt |
Mistake 3: PPF vs VPF Wrong Choice
| Scenario |
Wrong Choice |
Right Choice |
| Total PF contribution < ₹2.5L |
PPF |
VPF (higher rate) |
| Total PF contribution > ₹2.5L |
VPF |
PPF (tax-free interest) |
Mistake 4: Not Using Employer Match
| Situation |
Cost |
| Opting out of EPF (where allowed) |
Losing 3.67% of salary as free money |
| Over 25-year career (₹1L basic) |
~₹50L in lost corpus |
EPF + VPF + PPF: The Combined Strategy
Example: ₹80,000 Basic Salary
| Fund |
Calculation |
Annual Amount |
| EPF (employee) |
12% × ₹80,000 × 12 |
₹1,15,200 |
| EPF (employer) |
3.67% × ₹80,000 × 12 |
₹35,232 |
| VPF (additional) |
To reach ₹2.5L limit |
₹1,34,800 |
| PPF |
Remaining 80C space |
~₹15,000 |
25-Year Projection
| Component |
Corpus at Retirement |
| EPF (yours + employer) |
₹1.62 Cr |
| VPF |
₹1.45 Cr |
| PPF |
₹12.5 L |
| Total |
₹3.20 Cr |
Decision Flowchart
Are you salaried with EPF?
├── Yes → Is EPF + VPF < ₹2.5L/year?
│ ├── Yes → Max VPF first, then PPF
│ └── No → Skip VPF, use PPF for additional
└── No → Use PPF (max ₹1.5L) + NPS (₹50K for 80CCD1B)
Summary: Which Fund Wins?
| Criterion |
Winner |
| Interest rate |
EPF/VPF (8.25%) |
| Tax efficiency (unlimited) |
PPF (no ₹2.5L cap) |
| Employer contribution |
EPF only |
| Flexibility |
PPF (loan facility) |
| Self-employed access |
PPF only |
| Simplicity |
VPF (auto-deduction) |
Bottom line:
- EPF is mandatory and valuable—never opt out
- VPF makes sense up to ₹2.5L combined limit
- PPF complements both for tax-free diversification
Plan your provident fund strategy: Use our EPF Calculator and PPF Calculator to project your retirement corpus.
