EPF (Employee Provident Fund), PPF (Public Provident Fund), and NPS (National Pension System) are the three most important long-term savings and tax-saving instruments for salaried individuals in India. Each has different eligibility, returns, lock-in, and tax treatment. Here's the complete 2026 comparison.
Quick Comparison — EPF vs PPF vs NPS
| Parameter | EPF | PPF | NPS |
|---|---|---|---|
| Who can invest | Salaried employees (organised sector) | Any individual (including self-employed) | Any Indian citizen (18–70 years) |
| Interest/Return (2025-26) | 8.25% p.a. (declared by EPFO) | 7.1% p.a. (quarterly revision) | 12–14% (Tier-1 equity fund, market-linked) |
| Lock-in | Till resignation/retirement (partial withdrawal allowed) | 15 years (extensions of 5 years each) | Till age 60 |
| Tax on contribution | 80C — employee's share + voluntary PF | 80C — up to ₹1.5L | 80C + extra ₹50K under 80CCD(1B) |
| Tax on returns | Tax-free (if employed for 5+ years) | Tax-free | Partially taxable on exit |
| Tax on maturity | Tax-free after 5 years of service | Tax-free | 40% mandatory annuity (taxable as pension); 60% lump sum tax-free |
| Min annual investment | 12% of basic salary (mandatory for employees) | ₹500 | ₹1,000 |
| Max annual investment | 100% of basic + DA (voluntary PF) | ₹1.5 lakh | No upper limit (60% in equity tier for employees under 50) |
| Partial withdrawal | After 5 years (specific reasons) | From 7th year onwards (limited amounts) | Allowed after 3 years (25% for specific reasons) |
| Government backing | Yes (EPFO) | Yes (MoF) | PFRDA regulated |
EPF — Employee Provident Fund
EPF is mandatory for employees earning up to ₹15,000/month in organisations with 20+ employees. Both employer and employee contribute 12% of basic salary each. Employer's 12% goes partly to EPF (3.67%) and partly to EPS/EDLI (8.33%). Current interest: 8.25% for FY 2024-25 (declared retrospectively). EPF withdrawals are fully tax-free after 5 years of continuous employment. Tax on EPF interest: New rule from FY 2021-22 — interest on EPF contributions exceeding ₹2.5 lakh/year is taxable.
PPF — Public Provident Fund
PPF is the safest long-term investment in India — backed by the Government of India with sovereign guarantee. Current rate: 7.1% for Q1 FY 2026-27 (declared quarterly). Tax treatment: EEE (Exempt-Exempt-Exempt) — deposits under 80C, interest, and maturity are all tax-free. Lock-in: 15 years with partial withdrawal from 7th year and loans from 3rd to 6th year. NRIs cannot open new PPF accounts but can continue existing accounts till maturity.
NPS — National Pension System
NPS is the best retirement savings instrument for those who want market-linked returns AND tax benefits beyond the ₹1.5L cap. The extra ₹50,000 under Section 80CCD(1B) gives additional tax savings of ₹10,400 (30% bracket) to ₹15,600 (30% bracket with surcharge). NPS Tier-1 equity funds have returned 12–16% over 5-year periods (market-linked, not guaranteed). At 60, you must buy an annuity with at least 40% of the corpus (annuity income is taxable as salary). The remaining 60% lump sum is tax-free.
Which Is Best for You?
| Goal | Best Option | Why |
|---|---|---|
| Capital safety + guaranteed returns | PPF | Sovereign guarantee, highest safe returns, fully tax-free |
| Retirement corpus with market returns | NPS | Best long-term returns + extra 80CCD(1B) tax saving |
| Forced savings for salaried (no extra effort) | EPF | Automatic payroll deduction, good returns, tax-free |
| Tax saving beyond ₹1.5L limit | NPS 80CCD(1B) | Only instrument with extra ₹50K deduction beyond 80C cap |
| Parents of daughters, long-term | SSY (Sukanya Samriddhi Yojana) | 8.2% rate, fully tax-free, higher rate than PPF |