Let us see EPF and PPF individually.
EPF: this is Employee Provident Fund that is retirement benefit scheme and is offered to salaried employees. Here, a portion of salary is deducted (at present 12 percent) and is added to this fund. This deduction amount is as per government laws. Same amount is contributed by the employer. Yet, if an employee wishes to increase the amount of deduction, it may be possible under some scheme. However, employer would only pay the amount as set by government, regardless of whether employee wishes to increase the deduction percentage from his salary.
Here, the return given on the investment is 9.5 percent p.a. ( Revised in Year 2010. Earlier it was 8.5% p.a)
EPF can be transferred from one to another company or paid after the employee resigns or retires.
PPF: Public Provident Fund is a central government establishment. Here, being a salaried employee is not a compulsion. So you can open a PPF even if you are freelancer or consultant etc. Even if you have no earning at all, you can open this account. So, it is accessible to anyone and everyone alike. So, this account can be opened at any nationalized bank, branch or head post office or a few other post offices that are enlisted to offer this service. The minimum deposit per year has to be 500 INR and maximum limit is 70,000 INR per annum.
PPF returns 8 percent on the investment per annum.
The difference between EPF and PPF lies in the fact that EPF is in existence till the employee is salaried. PPF, on other hand, is for 15 years plus option 5 years extension. So, funds can be taken after PPF is mature. The extended duration allows you to add more funds to your PPF and you would get return on that amount too.
However, the striking feature is in favor of EPF that employer’s contribution is there while this is not in PPF. Other than that, both investments are deducted under 80C.