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VPF: Voluntary Provident Fund Scheme

VPF: Voluntary Provident Fund Scheme Voluntary Provident Fund: A scheme specifically made for salaried employees that help you plan your future and your post-retirement days. Find the difference between EPF, VPF, PPF and the benefits of VPF In case you want to add to your provident fund, we recommend a Voluntary Provident Fund. Here’s all you need to know. The Voluntary Provident Fund (VPF) is a scheme specifically made for salaried employees who want to add to their provident fund. The VPF is an extension of the Employee’s Provident Fund (EPF) and is a great tax-saving option. It is also a scheme that helps you plan your future and your post-retirement days. Basically, VPF is a voluntary contribution that you make towards your provident fund account, over and above the EPF contribution. The EPF account requires you to save 12 per cent of your basic salary and dearness allowance. With the VPF, you can choose to increase the contribution to up to 100 per cent. All you have to do is ask your HR team, or accounting team raise a request for the addition of a VPF account. The new VPF account gets attached to the existing EPF account and can be transferred in case you change your job. Investments into this scheme can be made for a minimum of five years. If the funds are withdrawn before five years, taxes will apply. Therefore, it is advisable to withdraw or discontinue the account after a period of five years. It usually has the same lock-in period as the EPF, which is retirement or resignation whichever is earlier. The rate of interest accrued on the deposits is reviewed by the government year and revised frequently. At present, VPF has the same rate of interest as EPF. It is the highest among the government-sponsored schemes as of March 1, 2019, the rate of interest on deposits in EPF and VPF is 8.65 per cent per annum. RELATED NEWS Piyush Goyal expected to meet USTR in Washington next month on sticky trade issues Commodities@Moneycontrol | Gold continues to outperform Digital transaction volumes up 51% in 2018-19 to 3,133.5 crore, says Ravi Shankar Prasad Returns are high, and risks are considerably low in the VPF. Investment in EPF and VPF accounts accrues higher returns than that the Public Provident Fund (PPF), which invites an interest of 8 per cent. One of the most important features of the VPF scheme is that it attracts tax exemptions. Investments up to Rs1.5 lakh into VPF account will be exempt from tax deductions under section 80(C) of Income Tax Act. Difference between EPF, VPF, PPF All kinds of provident funds are retirement plans for salaried employees who want to secure their future by saving a part of their income. The Employee Provident Fund (EPF), the Voluntary Provident Fund (VPF) and the Public Provident Fund (PPF) are long-term investment plans and help secure future of the investor. While all the three provident funds achieve the same goal, the features of each of these schemes are different. They have different eligibility criteria, maturity and rates of interest. The EPF and VPF are meant for salaried employees who set aside a part of their income every month. On the other hand PPF is available to all Indian nationals, including those working in unorganised sectors. While the EPF is mandatory for employees working in a company with over 20 employees, the VPF and PPF are voluntary schemes. Here’s a quick look at the difference between EPF, VPF and PPF: EPF VPF PPF Eligibility Salaried employees Salaried employees Any Indian Type Mandatory Voluntary Voluntary Minimum term of investment 5 years 5 years 15 years Maturity Upon retirement or resignation, whichever is earlier Upon retirement or resignation, whichever is earlier 15 years Rate of Interest (per annum) 8.65 per cent 8.65 per cent 8 per cent Tax benefit Exempt for investments up to Rs1.5 lakh Exempt for investments up to Rs1.5 lakh Exempt for investments up to Rs1.5 lakh Partial withdrawal Available Available Half of deposit from seventh year Features of VPF The Voluntary Provident Fund is an attachment to your existing EPF portfolio, wherein you can choose to save over and above the mandatory EPF savings. Unlike the EPF, it is a completely voluntary investment. Read complete Article here: https://www.moneycontrol.com/news/bus... Follow us: Website: https://www.moneycontrol.com/ Facebook:   / moneycontrolfb   Twitter:   / moneycontrolcom   Instagram:   / moneycontrolcom