The Employee Provident Fund is a mandatory retirement savings instrument in which one contributes 12% of basic and DA every month. The employer makes a matching contribution.
The employee's contribution is eligible for income tax deduction up to Rs 1 lakh a year.
The NPS corporate model, on the other hand, is a voluntary retirement savings scheme in which you contribute at least Rs 6,000 every year. There is no cap on investment. Like in EPF, the employee contribution is eligible for income tax deduction up to Rs 1 lakh a year. However, NPS offers additional tax deduction on employer contribution up to 10% of basic and DA. This is over and above the Rs 1 lakh limit of Section 80C.
The EPF money is not invested in equities. NPS allows up to 50% equity exposure. EPF, however, offers the option of premature withdrawal without foreclosure. It allows premature withdrawal for specific purposes such as house construction, marriage and illness.
In NPS, any premature withdrawal will lead to closure of the account. Only up to 20% funds can be withdrawn before you turn 60, the rest has to be used to buy annuity.