Categories: Business

Key things you should know about Voluntary Provident Fund


retirement planning

new Delhi. All the people who are employed, they deduct up to 12% from their basic salary every month through EPF i.e. Employers Provident Fund. But do you know that through VPF ie Voluntary Provident Fund, you can also deduct salary and save tax. One can opt for VPF while doing any job. Many of us are unaware of its benefits. There is no need to visit any bank or post office to open this account. You can get VPF deducted like EPF every month from your salary. If you also want to take advantage of VPF (Employee Provident Fund) account, then know what happens how VPF and employees can avail of it?

What is VPF?

VPF, like EPF, is an investment fund of savings for its retirement for employees of every private company called Retirement Fund or Voluntary Provident Fund.

VPF option is given to the employee. If the employee wishes, the VPF can get his salary deducted.

You can invest up to 100% of your basic salary and DA in a VPF account.

Keep in mind that VPF investment is different from 12% of your EPF investment.

VPF account gets as much or as little as the interest (between 7.5% to 8.5%) received in EPF account.

Employee is not obliged to open VPF account. The employee has a different option to invest in a VPF account.

If someone does a job and chooses the option of VPF, then just like EPF, you can take online account information and withdraw money.

Employee is required to work for five years to withdraw money from VPF account.

Opening of VPF account provides tax exemption as well as higher interest from EPF.

Money can be invested in VPF only and only on your choice.

How to open a VPF account?

To open VPF account, you can request to open VPF account with EPF by talking to your company's HR only when you start your job.

VPF is added to your EPF account as soon as it is processed and is deducted every month from the fixed contribution salary.

VPF account must be kept for at least five years, only then you will be able to withdraw money from it and take advantage.

Just as the EPF is deducted from your salary every month, in the same way the money starts to be deducted as soon as you choose the option of VPF.

Just like EPF, you can withdraw half the money or even full money from the VPF account at the time of emergency (for marriage, children's education, home loan or treatment of any disease).

Note that according to section 80C of income tax, it gets a rebate of 1.5 lakh but if you have withdrawn VPF 5 years ago, then you will have to pay tax on it according to your tax slab.

Why is it beneficial to deposit money in VPF?

Being a government scheme, investing in it is considered absolutely safe.

· 100% contribution can be made by the employee in his VPF account.

VPF account can be transferred by changing jobs and loan can also be taken if required through the account.

The interest rate in VPF is always more fixed by the government as compared to other government facilities like EPF, Sukanya Samridhi Scheme, Senior Citizen Scheme, PPF. VPF's interest rate keeps rising rapidly

Money deposited in VPF is your retirement fund. You get the money deposited in the VPF account only after your retirement apart from emergency.

In other investment options, you can withdraw money after a fixed time, but this is not the case in VPF.

Only private company can open VPF account.

Money gets double after 9 years by depositing money in VPF.

• Employees of private jobs always worry about pension and retirement. VPF helps you financially after retirement.

Always know about your investment advisor before choosing any type of investment option.

This post was published on May 12, 2020 3:13 am

Content Team

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