Tax & Savings
Contents
EPF vs NPS
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FREE TO USENO LOGIN REQUIREDUPDATED FY 2025–26
Mandatory provident fund vs voluntary pension scheme — contribution flexibility, returns, and withdrawal rules compared.
Visual Comparison
Key Differences
| Feature | EPF | NPS |
|---|---|---|
| Mandatory/Voluntary | Mandatory for eligible employees | Voluntary (+ employer can contribute) |
| Interest rate | 8.25% (FY 2024–25, fixed) | 8–11% (market-linked) |
| Equity exposure | None (debt only) | Up to 75% in equity (Active choice) |
| Withdrawal | Full at resignation/retirement | 60% at 60; 40% as annuity |
| Tax benefit | EEE (within limits) | 80C + extra 80CCD(1B) ₹50K + 80CCD(2) |
When to Choose Which
Choose EPF
- You are employed — this is automatic
- Employer matches contribution (12% of basic)
- Want safe guaranteed return
- No additional retirement vehicle needed
Choose NPS
- Maximising deductions (extra ₹50K via 80CCD(1B))
- Want equity exposure for higher returns
- Self-employed or freelancer (EPF not applicable)
- Employer offers NPS — additional 80CCD(2) benefit
Frequently Asked Questions
EPF offers guaranteed returns with employer matching. NPS offers higher potential returns via equity, extra ₹50K deduction, and is available to self-employed. Both together are powerful.
Yes. Many salaried employees contribute to EPF (mandatory) and also open a voluntary NPS Tier-1 account for the additional tax benefit.
The primary NPS account with tax benefits and withdrawal restrictions (locked until age 60). Tier-2 is a voluntary savings account without tax benefits but freely withdrawable.
An additional ₹50,000 deduction for NPS Tier-1 contribution, over and above the ₹1.5L 80C limit. Total potential deduction: ₹2 lakh.
Employer’s NPS contribution up to 10% of Basic+DA is deductible under 80CCD(2) — available even in the new tax regime.