EPF vs PPF Vs VPF – CTC and Salary Slip

Difference between EPF, PPF, VPF

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 the 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 the pension scheme.

This is a business expense that 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) 

The 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 the Voluntary Provident Fund (VPF).

The amount that you see on your monthly salary payslip as a 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.

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 at 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 in the CTC letter nor on your payslip.

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).

FAQ