Difference between GPF and PPF

GPF and PPF are safe ways to save money. Explore their benefits and differences to choose the best option.
3 min

A provident fund is a savings scheme that is designed to set up a reliable retirement corpus. In India, individuals and organisations use several types of provident funds to leverage retirement benefits. Some of the prominent ones include the General Provident Fund (GPF) and Public Provident Fund (PPF).

A general provident fund is a savings scheme that is made available to government employees. Under this scheme, employees can contribute a part of the wages on a regular basis until they exit the government organisation. On retirement, the recruiter transfers the accumulated amount in the general provident fund account to the employee.

A public provident fund is a government-backed savings scheme that is designed to provide individuals with a safe and secure post-retirement life. As the name suggests, this plan is available to the general public—be it a serviceman, a businessman, a professional, or a self-employed individual. Under this plan, a deposit of at least Rs. 500 is required every fiscal year, with a maximum limit of Rs. 1.5 lakh per year. Alongside retirement savings, individuals can claim income tax benefits on the amount they invest in the account.

PPF account for minors is currently the most popular long-term investment scheme sponsored by the Indian government. The minor’s parents or guardians can open it on their behalf.

One question that puzzles people is whether GPF offers more benefits than PPF. Let us now dive into the GPF vs. PPF debate to get some answers.




Who is eligible to invest?

This programme is available to government workers who started their careers before 1st January 2004.

It can include the following:

  •  Employees of the Government of India
  • Temporary government servants with continued service of at least 12 months
  • Re-employed pensioners (excluding ones eligible for the Contributory Provident Fund)

This plan is available to any Indian citizen with domicile credentials.

It can include the following:

  • Working professionals (salaried and self-employed)
  • Minors with a PPF account opened in their name by a parent or guardian

How much investment must be made?

Employee contribution: 6% of the salary and emoluments

Government contribution: 6% of the employee's salary

Minimum amount: Rs. 500 per year

Maximum amount: Rs. 1.5 lakh per year

Maximum number of deposits: Unlimited

What is the current rate of interest?



What are the available loan options?

Loan against GPF can be availed at any time during a government employee's career. There is no upper or lower limit.

Loans are available between the third and sixth fiscal years of opening the account, up to a maximum of 25% of the balance available two years before the loan application.

What is the maturity tenure?

The fund matures when the government worker reaches retirement or superannuation.

The fund matures in 15 years. However, it can be extended for another five years.

Is it tax-effective?

Contributions to GPF are eligible for tax exemptions under Section 80C of the ITA. Moreover, interest earned and withdrawals at the time of retirement are also tax-free.

Contributions made to a PPF account are eligible for tax deductions under Section 80C of the ITA, enabling investors to claim deductions of up to Rs. 1.5 lakh annually. Moreover, the maturity proceeds of a PPF account, which includes the principal fund and accumulated interest, are fully exempt from taxation.

What is the premature closure eligibility?

A government worker can make a premature closure of the account upon leaving the government service.

An employee can make a premature closure of the account after 5 years on pre-defined grounds, including medical emergency, children’s higher education, marriage and buying a house or consumer durables.

Comparison between GPF vs. PPF

Both these provident funds promote the practice of savings when an individual has a regular source of income. They help to save sufficient funds that can be used to meet expenses when one is out of income. However, there are several differences between GPF vs. PPF that one must duly consider

1. Benefit criteria for GPF vs. PPF

  • The rate of interest on PPF contributions is declared by the government on a quarterly basis. It is generally kept higher than the prevailing fixed deposit rates.
  • Being a government fund, investment in GPF is safe, and the rate of interest offered is higher than the prevailing FD rates.

2. Flexibility criteria for GPF vs. PPF

  • PPF is a voluntary decision of the subscriber.
  • Subscription under GPF is mandatory for eligible employees.

3. Objective criteria for GPF vs. PPF

  • The lock-in period for GPF depends on the duration of government service.
  • As opposed to the GPF, the PPF serves as a savings plan for anyone willing to lock in their contributions for a period of 15 years, which can be prolonged further.

Also Read: Post Office PPF Account


A general provident fund is similar to a public provident fund. They both serve long-term savings goals and financial stability, each with unique features in terms of eligibility, contributions, interest rates, and withdrawal conditions. Moreover, these strategies ensure that your immediate financial needs are addressed without the need for expensive bank loans. Such benefits have made savings programmes among the most heavily invested schemes in India.

Choosing between GPF vs. PPF is crucial to smart financial planning.  Online platforms can be of great assistance if you want to compare GPF vs. PPF saving schemes or make online PPF payments. It is crucial that you properly understand all of your choices before making a well-informed and calculated decision.

Frequently asked questions

How is OD interest calculated?

The OD interest is calculated using the average daily balance method. Here, you use the withdrawn amount for calculation purposes.

Let us take a look at an example. If you have Rs. 1,00,000 in your account and withdraw Rs. 30,000 as an overdraft, the interest will be charged on Rs. 30,000 according to the pre-defined interest rate or APR.

Is an Overdraft better or a personal loan?

This depends on your employment status and requirements. If you require emergency funds or need funds to make a down payment for a home loan, a personal loan is ideal. However, if you are a businessman with a current account and have short-term fund requirements, you can opt for the overdraft facility.


As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.