Which one is better EPF or PPF or NPS

The Employee Provident Fund Tax announced in the Union Budget 2016-17 has everyone scurrying to withdraw their deposits. Under the Budget proposal, the government is planning to tax 60 per cent of Employees Provident Fund corpus on contributions made after April 1, 2016. The move by the government has sent confusing signals and has put a spotlight on retirement products available in the country.

After the announcement of the EPF tax in the Budget, the government came under severe pressure to withdraw the entire provision. While speaking at a post-Budget conference with industry chambers, Union Finance Minister Minister Arun Jaitley sought to assuage people’s concerns on Wednesday and said he would spell out the final decision on taxing withdrawals from the Employees’ Provident Fund (EPF) at the time of replying to a debate in Parliament.

Acording to Finance Minister, “EPF withdrawal tax is not aimed at raising revenues, rather the emphasis of the government is to make India a pensioned and insured society. No tax will levied if the corpus at the time of withdrawal is invested in pension-based annuities.”

Meanwhile, we look at the three major retirement schemes – EPF, Public Provident Fund and National Pension Scheme – and what they have on offer for you.

Which one is better EPF or PPF or NPS

The EPF is run by the Employees’ Provident Fund Organisation (EPFO), while the old-age income security scheme – the Public Provident Fund (PPF) – is sponsored by the government. The National Pension Scheme is sponsored by the Pension Fund Regulatory and Development Authority (PFRDA).

Aside from the EPF and PPF, the National Pension System (NPS) is a recent entrant in this space. Arun Jaitley has sought to make the NPS more tax-friendly. The 40 per cent of the corpus that an investor can withdraw after maturity is proposed to be made tax-free. The long-term aim is to bring it on an equal footing with the EPF on the taxation front.

The Public Provident Fund remains totally exempted throughout. For PPF, with an 8.7 per cent annual rate of interest, the Economic Survey 2016 clearly mentioned that after factoring in tax rate on deposit and interest, the effective interest rate comes to a high 16 per cent.

The NPS, on the other hand, offers market-linked returns with a maximum equity investment of 50 per cent from subscriber money permitted under the scheme. In essence, it provides a window to beat returns from PPF and EPF in the long term.


Eligibility: Employees drawing basic salary of Rs 15,000 have to compulsory contribute to the Provident fund and employees drawing above Rs 15,000 have an option to become member of the Provident Fund

Where to open: Scheme is provided by Employees’ Provident Fund Organisation (EPFO) through organisation enrolled with it. Your office will open the account for you if they employ 20 persons or more

Investment limit: Employee contributes 12 per cent of basic salary and and equivalent amount is contributed by the Employer.

Returns: EPF funds will earn a 8.8 per cent for 2015-16, marginally up from the previous 8.75 per cent.

Duration/maturity: Till the retirement of the employee or the employee opting out of

Loans/Withdrawals: You can withdraw from EPF account for children’s education, marriage of self, children and siblings, purchase/construction of a house or any medical emergencies. However, withdrawal is subject to certain conditions:

• Minimum 7 years of service;

• Maximum 3 withdrawals during which you hold the EPF sAccount;

• Maximum aggregate withdrawal would be 50% of the total contributions made by you.

For medical emergencies, there is no minimum service period. However, the maximum amount one can withdraw is 6 times the basic salary and proof of hospitalisation is required.

However, withdrawal for purchase/construction of house is available only once in an individual’s working life. The minimum service period is 5 years and the maximum withdrawable amount is 36 times your total salary (for construction of property) and 24 times (for purchase of property).

Tax Benefits: Currently enjoys the Exempt, Exempt, Exempt (EEE) status. However, Budget 2016-17 has stoked a massive controversy by proposing that has proposed that only 40 per cent of the contributions made to EPF after April 1, 2016, will be tax-free on withdrawal. With widespread opposition to the move, the government is likely to reconsider its decision and a final word is awaited.

Nomination: Subscriber can nominate one or more person belonging to his family. If he has no family he can nominate any person or persons of his choice but if he subsequently acquires family, such nomination becomes invalid and he will have to make a fresh nomination of one or more persons belonging to his family. You cannot make your brother your nominee as per the Acts.

Transfer of Account: Account is transferable with change of job of subscriber


Eligibility: Individuals can open account in their name, also open another account on behalf of a minor. Joint/NRI/HUF accounts cannot be opened.

Where to open: Post offices, public sector banks and few private banks offer the government-run scheme.

Investment Limit: Minimum Rs 500 with a cap of Rs 1.5 lakhs per annum. Deposits can be made in one lump-sum or in 12 installments per year.

Interest Rate/Returns: 8.7 per annum with effect from April 1, 2015. Interest is paid on March 31 every year. Interest calculated on monthly basis on the minimum balance between 5th and last day of the month.

Scheme Duration: 15 years with the provision to extend in one or more blocks of 5 years each. Premature closure is not allowed before 15 years.

Loans/withdrawals: Available from third financial year. Part withdrawal is permitted from 7th Financial Year

Taxation: PPF comes under the Exempt, Exempt and Exempt (EEE) category which makes it tax exempt from investment till maturity. Subscription qualifies for tax benefits under 80C of Income Tax Act.

Nomination: One or more persons can be nominated

Transfer of Account: The PPF account can be transferred free of charge to another branch, another bank or post office.


Eligibility: All citizens between 18 and 60 years as on the date of submission of application

Where to open: Authorised Points of Presence (POP) and almost all private and public sector banks apart from several other financial institutions offer the scheme.

Investment limit: (For Tier-1 non-withdrawable) minimum Contributions is Rs 500 with a total minimum contribution per year at Rs 6,000. For Tier-II (withdrawable) minimum contributions Rs 250 with minimum balance of Rs 2000. No cap on maximum investment.

Returns: NPS offers market-linked returns. Being a defined contribution scheme where subscribers contribute to his account, there is no defined benefit that would be available at the time of maturity. The accumulated wealth depends on the contributions made and the income generated from investment of such wealth.

Duration/maturity: Maturity of scheme is at age 60

Loans/Withdrawals: On retirement, a subscriber can opt out of NPS. However, the subscriber would be required to invest minimum 40 per cent of the accumulated savings to purchase a life annuity, while remaining can be taken out a lump-sum.

Tax Benefits: Tier-I account is exempt, exempt, taxed (EET). The amount contributed is entitled for deduction from gross total income upto Rs 1 lakh (along with other prescribed investments) as per section 80C of the Income Tax Act.

The Union Budget 2016-17 has proposed that 40% of retirement corpus of a subscriber of National Pension Scheme (NPS) at the time of retirement will be tax exempt. Further, annuity payment to the legal heir after the death of pensioner has been made exempt from tax.

Nomination: In the event of death of the subscriber, the nominee can receive 100 per cent of the NPS pension wealth in lump sum.

Transfer of Account: Provides full portability within geographies and between POPs

About Haja

Software Engineer by profession, Author and the Founder of "bench3" you can connect with me on Twitter , Facebook and also on Google+


  1. I went over this web site and I believe you have a lot of excellent information, bookmarked (:.

  2. thanks for sharing this information..have shared this link with others keep posting such information..

  3. We’re a group of volunteers and opening a new scheme in our community.
    Your site provided us with valuable information to work on. You’ve done
    a formidable job and our whole community will be thankful
    to you.

  4. Piece of writing writing is also a fun, if you be familiar with after that you can write if not it is
    complex to write.

  5. What’s Going down i am new to this, I stumbled upon this I’ve found It
    absolutely useful and it has helped me out loads.
    I’m hoping to give a contribution & help different users like its aided me.
    Good job.

  6. With havin so much content do you ever run into any issues of plagorism or copyright violation? My site has a lot of exclusive content I’ve either authored
    myself or outsourced but it appears a lot of it is popping it up all
    over the internet without my permission. Do you know any
    techniques to help prevent content from being ripped off?
    I’d definitely appreciate it.

  7. Good post. I certainly love this site. Keep writing!

  8. good material thanks does insurance cover edex Largely in protest over Washington’s reluctance to get involved militarily in Syria, the prince reportedly said Saudi Arabia would be scaling back its co-operation with the CIA over arming and training Syria’s Sunni rebels.

  9. I just want to say I’m newbie to weblog and certainly savored this web-site. Most likely I’m planning to bookmark your site . You amazingly have fabulous articles. Bless you for sharing with us your website page.

  10. There are a few intriguing points over time on this page but I do not determine if they all center to heart. There exists some validity but I’m going to take hold opinion until I consider it further. Very good article , thanks and that we want much more! Added to FeedBurner in addition

  11. thanks for sharing this information have shared this link with others keep posting such information..

  12. Thanks for sharing superb informations. Your web site is very cool. I’m impressed by the details that you have on this web site. It reveals how nicely you understand this subject. Bookmarked this web page, will come back for more articles. You, my friend, ROCK! I found just the info I already searched everywhere and just couldn’t come across. What a great web site.

  13. Hi there, I discovered your website by way of Google even as searching for a related matter, your website got here up, it seems great. I’ve bookmarked it in my google bookmarks.

  14. Badsanierung Ingolstadt Sie möchten Ihr Badezimmer in Ingolstadt sanieren, renovieren oder umbauen? Ihr Badumbau soll möglichst wenig Arbeit machen? Die kompetenten Fachleute von FEPA badsanierung.center planen und gestalten Ihr Bad neu und koordinieren alle Arbeiten – damit Sie sich um nichts kümmern müssen. Alles aus einer Hand!

  15. Thanks for some other informative blog. Where else could I get that kind of information written in such an ideal means? I’ve a mission that I am just now running on, and I have been on the glance out for such info.

  16. In wenigen Tagen zum neuen Bad!

  17. Sie möchten Ihr Badezimmer in 80331 München renovieren, sanieren oder umbauen? Ihre Badrenovierung soll möglichst wenig Arbeit machen? Wir gestalten Ihr Bad neu und koordinieren alle Arbeiten – damit Sie sich um nichts kümmern müssen. Alles aus einer Hand!.

  18. Hey dude, what kind of wordpress theme are you using? i want it to use on my blog too ,  

Speak Your Mind