GPF interest rate remain unchanged at 7.1 %: How it is different from EPF

Government workers can invest in the GPF, a long-term savings plan, and build up savings throughout the course of their employment. Upon retirement, an employee is paid the entire sum accumulated

The Union Ministry of Finance has kept the interest rate for the General Provident Fund (GPF) unchanged for 17th quarter in the row at 7.1 per cent.

“It is announced general information that during the year 2024-2025, accumulations at the credit of subscribers to the General Provident Fund and other similar funds shall carry interest at the rate of 7.1 per cent (Seven point one percent) w.e.f . 1 October, 2024 to 31th December, 2024. This rate will be in force w.e.f. 1 October, 2024,” Department of Economic Affairs (DEA), Ministry of Finance said in a notification.
 

This GPF interest rate will apply to several funds, including:  

 

General provident fund (central services) 

Contributory provident fund 

All India services provident fund 

State railway provident fund 

General provident fund (defence services) 

Indian ordnance department provident fund 

Indian ordnance factories workmen’s provident fund 

Indian naval dockyard workmen’s provident fund 

Defence services officers provident fund 

Armed forces personnel provident fund

Difference between General Provident Fund (GPF) and Employees’ Provident Fund (EPF)

What is GPF?

The GPF is a long-term investment option exclusively for government employees. They contribute a portion of their salary to the fund on a regular basis. The government offers a fixed interest rate on these contributions, which is reviewed quarterly by the Ministry of Finance. Upon retirement, employees receive the entire accumulated amount, providing them with financial security after they leave service.

Eligibility: Exclusively for government employees

Contributions: Employees contribute a minimum of 6 per cent of salary; can contribute up to 100 per cent.

Interest rate: It is offering an interest rate of 7.1 per cent per annum.

Maturity: GPF matures upon the employee's retirement.

Premature withdrawal: Allowed only upon leaving government service.

Advances: Interest-free loans available for specific needs (e.g., education, medical).

Tax benefits: GPF is a tax-free retirement-cum savings scheme. Therefore, the contributions, interest earned on it as well as the returns from a GPF account are exempt from tax under Section 80C. 

What is EPF?

EPF is available for employees of the private sector in the country. Private firms with more than 20 employees have to mandatorily deduct provident funds from the salary of employees. 

Eligibility: Available for all salaried employees, including private sector

Contributions: EPF, the company can deduct 12 per cent of the basic salary of an employee as EPF contribution and the employer needs to match the contribution. An employee has the option to raise the voluntary contribution beyond 12 per cent.

Interest rate: It is offering an interest rate of 8.25 per cent per annum.

Maturity: At age 58 or upon retirement.

Premature withdrawal: Allowed after two months of unemployment.

Advances: No advance facility; entire amount is withdrawn at retirement.

Tax benefits: EPF account after five years of its creation are tax-exempt. Moreover, contributions made in an EPF account every year up to Rs.1.5 lakh are eligible for tax exemptions under Section 80C of the Income Tax Act, 1961. 

Recently the government has kept the interest rates unchanged for all small savings schemes for the October-December 2024 quarter. 

The current interest rates:

Sukanya Samriddhi Account Scheme: Interest rate 8.2 per cent per annum

Senior Citizen Savings Scheme (SCSS): Interest rate 8.2 per cent

Public Provident Fund (PPF): Interest rate 7.1 per cent

National Savings Certificate (NSC): Interest rate 7.7 per cent per annum

Post Office Monthly Income Scheme (POMIS): Interest rate 7.4 per cent per annum

Mahila Samman Savings Certificate: Interest rate 7.5 per cent per annum

Post Office Recurring Deposit Account: Interest rate 6.7 per cent per annum