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What Should I Choose - FD Or EPF?

Updated On Nov 23, 2021

Employee Provident Fund (EPF)

One of the more popular retirement / saving schemes is a Employee Provident Fund which is under governmental steps of development being regulated through Ministry Of Labour .EPF is a mandatory fund for salaried employees wherein they give up 12% of their salary as their part of contributions to the fund and the rest is put in by the employer it is aimed to secure a retirement fund for the employee during the working years of their career. This scheme also provides for the interest on the accumulated funds and the investor can withdraw his funds along with the earned interest as a lump sum. 

Fixed Deposit (FD)

Fixed deposit is a one-of-a-kind financial tool that helps the investor save his/her money for a fixed period of time thus earning the name term deposits. The interest that the investor earns is more than what they would earn by saving their money through a savings account. The Interest rate and time period are fixed from the get go so the investor has a clear picture of the returns he is going to earn on his deposits and in what time.

Key Differences Between EPF And FD

The key differences between EPF and FD are:

1. Eligibility 

EPF is only available to the employees of companies registered under the Employee Provident Act for which the Employee Provident Fund Organization (EFPO) is responsible whereas all residents ,HUFs ,NRIs, Corporations can invest their money through A fixed Deposit fund issued by a bank .

2. Investment Duration 

In an EPF fund the fund continues as long as the employee is working under a registered company, moreover the account can be transferred when the employee decides to switch companies whereas an FD can last as long as the investor chooses up to 20 years.

 3. Investment Amount

In an EPF account the employee and employer have to both pay their respective contributions to the fund whereas in Fixed deposit the investor can go from 100 RS to the maximum of 1,50,000 Rs in a single year.

4. Loan Facility 

An EPF account allows the investor to take out a loan against the accumulated funds for certain predetermined special scenarios and Fixed Deposit account also allows the Users to take out a loan against their accumulated savings whenever they desire.

5. Tax Benefits 

Contributions made to an EPF account are tax deductible and the funds upon maturity or withdrawal are exempted from income tax provided that they continue for at least 5 years under section 80C of Income Tax Act whereas in Fixed Deposits there is tax exemption of amount up to 1,50,000 RS of interest accrued for a year.


What kind of a scheme is better to invest in depends a lot on the abovementioned factors it depends on if you work in registered company than your pick by default would be the EPF but one can always invest their additional income in a Fixed Deposit due to its flexible nature on loans and other withdrawal facilities , one can also use Fixed Deposit scheme as  a tax saving tools both funds work well in their own way and the above mentioned factors would help a investor pick out a fund of their choice to pool up their savings in.

Also read - Know About Investment Plans For 3 Years

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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