The government runs several savings schemes, including the Provident Fund (PF). There are three types of Provident Funds: Public Provident Fund (PPF), Employee Provident Fund (EPF), and General Provident Fund (GPF).

Recently, GPF has been in the news after a scam was uncovered in the Municipal Corporation of Satna, Madhya Pradesh. In this case, a GPF branch clerk illegally withdrew lakhs of rupees from the GPF accounts of permanent employees. Many people think that GPF and EPF are the same, but this is not true. There are significant differences between them. Throughout this article, we will share all the details about the key differences between the two schemes, EPF and GPF.

Only government employees can contribute to GPF, while private sector employees can contribute to EPF. GPF provides a lump sum amount at the time of retirement, whereas EPF matures when the employee turns 58 years old. Contributions to GPF, interest earned, and returns are tax-free under Section 80C of the Income Tax Act, 1961. Contributions up to Rs 1.5 lakh to an EPF account are eligible for a tax deduction under Section 80C of the Income Tax Act, 1961.

Employees Provident Fund (EPF)

The Employees Provident Fund (EPF) is for employees working in companies with 20 or more employees. This scheme ensures financial security after retirement. A fixed percentage of the employee’s salary is deposited in the EPF, and the company contributes the same amount. However, only 3.67% of the total company contribution goes into EPF, while the remaining 8.33% is deposited in the Employees’ Pension Scheme (EPS). After retirement, the amount in EPF is given to the employees in a lump sum. The amount in the pension scheme provides a monthly pension after retirement.

The interest rate on EPF for the financial year 2023-24 is set at 8.25%. EPF not only ensures financial security but also helps meet pension needs, providing a safe savings option for private sector employees.

General Provident Fund (GPF)

The General Provident Fund (GPF) is a savings scheme available only for government sector employees. It provides financial stability after retirement and is a safe savings option. Employees contribute a minimum of 6% of their salary to the GPF and can access the accumulated wealth at retirement. The interest rate on GPF is currently 7.1%.

Membership in GPF is mandatory for all temporary and permanent government employees, as well as re-employed pensioners (who are not eligible for the Contributory Provident Fund) after completing one year of service.

The minimum contribution to GPF is 6%, and employees can contribute up to 100% of their salary. GPF subscribers can withdraw funds for emergencies like education, medical needs, marriage, or buying a house. GPF matures at the age of retirement or superannuation, and employees must complete 10 years of service to withdraw from the fund.