New Delhi: After getting approval from the Ministry of Finance, the Ministry of Labour and Employment on Thursday approved 8.65 per cent interest rate on employees’ provident fund for 2018-19. As per reports, the amount will now be credited to the accounts of over 60 million subscribers of EPFO.
At this crucial time, it is important to understand the difference between the Public Provident Fund (PPF) and the Employee’s Provident Fund (EPF).
Public Provident Fund
A savings scheme offered by the Government of India, the interest rate on the account is paid by the government. The applicable PPF interest rate for July to September 2019 (Q2 FY 2019-20) was fixed at 7.9%. The interest rate for January – March and April – June 2019 was 8%.
While the contributions to the PPF account up to Rs 1.5 lakh per annum are tax-free, the general interest on the PPF account is also tax-free. The interest rate for the PPF account is announced by the Central government every quarter. In general, the PPF returns are more than FD rates of many banks.
People who are interested to invest in PPF need to open one PPF account either in a post office, nationalised banks or in major private banks. Once the account is opened, a passbook similar to the bank passbook will be issued to members. To open a PPF account, some documents such as ID proof, address proof, nomination form and one nomination form are needed.
Employee’s Provident Fund
A retirement-benefit scheme, the Employee’s Provident Fund (EPF) is available to all salaried employees. Maintained and taken care by the Employees Provident Fund Organisation of India (EPFO), it helps employees save a portion of their income every month which can be used later for some purpose or can be used after retirement. Any company with over 20 employees is required by law to register with the EPFO.
The EPF is active every time an employee receives his salary. While changing a job, it’s important for employees to update the EPF information with the new company.