PPF vs VPF – Which is Better for Long-Term Savings in 2025?

Indialends, 11 Sep 2025

PPF vs VPF: Which is Better for Your Long-Term Savings?

What’s Inside This Blog?

What is PPF (Public Provident Fund)? What is VPF (Voluntary Provident Fund)? PPF vs VPF: Detailed Comparison Table Which One Should You Choose? Example Scenario

PPF vs VPF: Which is Better for Your Long-Term Savings?

When it comes to safe, government-backed investments in India, Public Provident Fund (PPF) and Voluntary Provident Fund (VPF) are two of the most popular options. Both offer attractive interest rates, tax benefits, and long-term wealth-building potential. However, they differ in terms of contribution flexibility, lock-in period, and returns.

In this blog, we will compare PPF vs VPF so you can decide which one suits your financial goals.

What is PPF (Public Provident Fund)?

The Public Provident Fund is a long-term savings scheme backed by the Government of India, available to any Indian citizen.

Tenure: 15 years (can be extended in blocks of 5 years)
Interest Rate: 7.1% p.a. for FY 2024–25 (source)
Minimum Investment: ₹500 per year
Maximum Investment: ₹1.5 lakh per year

What is VPF (Voluntary Provident Fund)?

The Voluntary Provident Fund is an extension of the Employee Provident Fund (EPF) that allows salaried employees to contribute beyond the mandatory 12% of their basic salary.

Tenure: Until the employee retires or leaves the job
Interest Rate: 8.25% p.a. for FY 2024–25 (source)
Minimum Investment: No fixed lower limit; depends on salary
Maximum Investment: Up to 100% of basic salary + DA

PPF vs VPF: Detailed Comparison Table

Feature	PPF	VPF
Eligibility	Any Indian citizen	Only salaried employees with EPF account
Interest Rate (FY 2024–25)	7.1% p.a.	8.25% p.a.
Lock-in Period	15 years	Till retirement/job change
Contribution Limit	₹500 – ₹1.5 lakh/year	Up to 100% of basic + DA
Tax Benefit	Section 80C deduction up to ₹1.5 lakh	Section 80C deduction up to ₹1.5 lakh
Interest Taxability	Tax-free	Tax-free (up to ₹2.5 lakh/year contribution)
Withdrawal Rules	Partial withdrawal after 5 years	Partial withdrawal allowed for specific purposes
Risk Level	Very low	Very low

Which One Should You Choose?

Choose PPF if you want a government-backed savings scheme with a fixed 15-year tenure and are not a salaried employee.
Choose VPF if you are a salaried employee and want higher interest rates, along with the flexibility to contribute more towards your retirement.

💡 Smart Tip: If eligible, you can invest in both to diversify your tax-saving portfolio and maximize your guaranteed returns.

Example Scenario

If you invest ₹10,000/month: