Categories: Finance

EPF vs PPF Vs VPF – CTC and Salary Slip

EPF vs PPF Vs VPF – What’s the difference?

There are three (3) types of provident fund amounts that are associated with a salaried person.

1. Employer Provident Fund or Provident Fund (EPF)

Employers in India with an employee base of 20 or more employees are required to comply with the Employee provident fund schemes run by government. This scheme’s aim is to contribute some portion (generally 12%) of your monthly salary towards your retirement benefits.

A small part of it (a chunk from 12% itself) is also contributed towards pension scheme.

Provident fund as shown on Cost to company letter

This is a business expense which your employer contributes to YOUR PF account from their own pocket.
The amount of PF that is mentioned on your CTC letter is actually employer contributed PF.

This amount is tax free for you.
It is NOT included in the yearly tax rebate amount for investments.

2. Employee Provident Fund (VPF)

Government PF scheme also mandates that you as an employee should also contribute to YOUR PF account monthly i.e. an equal portion (generally 12%) or any other amount that you want to.
This is also known as Voluntary Provident Fund (VPF).

The amount that you see on your monthly salary pay slip as deduction is actually this amount and NOT the PF (Employer provident fund). The employer PF is neither added to your income nor deducted.

Hence, it is NOT reflected in your pay slip but is shown on CTC letter.

Since VPF is taken out of your pocket, it is shown on the deductions side of your salary slip.
This is also the reason behind NOT showing VPF explicitly in your CTC letter.

VPF is an expense for you and NOT your employer.

Provident fund as shown on Salary Slip

This amount is considered as an investment by you and forms part of the yearly tax rebate investments.

3. Public Provident Fund (PPF)

This is NOT related to your employer at all.
It is basically a personal provident fund account that you can open with any of the designated banks like SBI etc..

It is like a savings account that you can open any time. Also, there is NO obligation to open it.

This account is again a long term investment account and helps you save income tax as the amount credited to this account is allowed to be included in your tax rebate investments.

Please note that the amount in this account is neither mentioned on CTC letter nor on your pay slip.

But yes, if you declared it in your company to save tax, it will be mentioned on FORM 16 (Salary and tax calculation form issued by your employer).

What is the difference between PPF and EPF?

PPF is an account run by the central government, available to open by anyone including business man, self employed and salaried class.
EPF is a retirement benefit applicable only for salaried employees. Any non-salaried person cannot open an EPF account.

What is the difference between PPF and EPF?

PPF is an account run by the central government, available to open by anyone including business man, self employed and salaried class.
VPF is the amount that a salaried employee contributes to his employer provided PF account (Also known as EPF). Any non-salaried person cannot open this kind of PF account.
This account is opened by employer.

Is PF and PPF same?

PF is generally referred as the employer provided PF account.
PPF is open for general public and is run by central govt. of India.

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Published by
Anil Gupta

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