Saving taxes with VPF is simple and straightforward as the contributions for it are deducted directly from the salary by the employers. This alleviates the need for employees to open a separate account as they should in the case of PPF.

Should we invest in VPF?

The VPF contributions too earn the same returns that the employee's and employer's contributions earn. It is for this reason that VPF is considered a very attractive option to invest in. The current interest offered on VPF contributions is 8.5%, which is much higher than that of the Public Provident Fund (PPF).

Is VPF money safe?

Safe option to invest: Since the scheme is operated by the Indian Government, there are no risks involved in investing in the scheme. Compared to other long-term investment options offered by private organisations, it is very safe to invest in a VPF account.

Can I withdraw VPF after 5 years?

Withdrawals after the 5-year lock-in period are completely tax-free. There is income tax exemption at all stages -contribution, investment, accumulation and returns and also at the time of withdrawal. Employees can access the VPF money for reasons like marriage, house purchase, children's education, etc.

What is the lock-in period for VPF?

Lock-in period

As per Voluntary Provident Fund withdrawal rules, contribution to a VPF account is subject to a maturity period of 5 years. Therefore, an individual cannot withdraw any sum from their Voluntary Provident Fund before the completion of 5 years sans repercussions.

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38 related questions found

Is VPF taxable in 2021?

It was announced in Budget 2021 that interest on Employees' Provident Fund (EPF) and Voluntary Provident Fund (VPF) contributions above Rs 2.5 lakh in a financial year will be taxable. ... The Rs 2.5 lakh threshold is meant for non-government employees.

How much should I invest in VPF?

Voluntary Provident Fund (VPF) aka Voluntary Retirement Fund is the voluntary fund contribution from the employee towards his provident fund account. This contribution is beyond the 12% of contribution by an employee towards his EPF. The maximum contribution is up to 100% of his Basic Salary and Dearness Allowance.

Should I continue VPF?

Most of the experts are advising their clients to continue investing in VPF as it is currently offering an interest rate of 8.5%, which is much higher than the interest rate being offered by small savings schemes such as public provident fund (PPF).

Can I invest more than 1.5 lakhs in VPF?

VPF also promises deductions under section 80C of the Income-tax Act, 1961 up to Rs 1.5 lakh in a particular fiscal year when it comes to tax-free benefit on the investment number, much like EPF. ... For PPF, the overall return received is exempted from taxation, but not more than Rs 1.5 lakh can be invested per year.

Can we have both PPF and VPF?

Both the VPF and PPF suit long-term goals.

If you are a self-employed person, then PPF is your only option. If you fall in the higher income tax bracket and are looking to invest larger amount in fixed income investment options with tax-free return, then you can utilise both the options together.

Does VPF attract tax?

Taxation of VPF proceeds

The VPF contributions too enjoy the same tax norms that EPF contributions do. The taxpayers can deduct up to Rs 1,50,000 a year by investing in VPF. The interest earned on VPF is tax-free and withdrawals made after a period of five years are also made tax-exempt.

Is VPF interest compounded monthly?

Interest for a Voluntary Provident Fund is calculated monthly based on the opening balance of each month. This opening balance includes both EPF – employee's and employer's contribution and VPF. ... 15000 as her contribution to Harish's EPF account. Also, the VPF interest rate in 2020 is 8.5% per annum.

Can I have two provident fund accounts?

A member should have only one UAN having all his EPF accounts linked to it. EPF accounts are non-transferrable in case of different employees. However, an employee having two UANs can get his EPF account transferred from one to another and get his previous UAN deactivated.

How do I check my VPF balance?

Via Missed Call Service

One of the simplest ways of free-checking your VPF balance is the Missed Call method. A member is just required to give a missed call to a certain number, following which, they would receive an SMS depicting their latest balance. The number for this service is 011 2290 1406.

How is VPF different from PF?

Voluntary Provident Fund (VPF) is an extension of the Employees' Provident Fund (EPF). ... The VPF contributions are deposited into the EPF account of the employee and earn the same rate of interest as that of the EPF contributions. There is no capping on the VPF contributions.

How can I open a VPF account in HDFC Bank?

Visit the HDFC Bank portal and log in with your credentials. Click on 'Public Provident Fund' and select the 'PPF Accounts 'option. Select and click 'Open Now'. Enter relevant details of the bank account number you would like to contribute to your PPF account and the PAN number.

What is VPF interest rate?

Any employee who is working in India can invest in VPF. It earns interest at the rate of 8.5% per annum. Investors also get tax exemption under section 80C of income tax in this and the return on maturity is also tax-free.

Can I change VPF contribution every month?

You can choose to start, stop, increase or decrease your VPF contributions every month. However, some employers provide a window to make these changes only at the beginning of the financial year. So, you need to check with your employer.

Is VPF taxable under new tax regime?

As announced in the Budget 2021, if deposits in Employees' Provident Fund (EPF) and Voluntary Provident Fund (VPF) by an employee exceed Rs 2.5 lakh in a financial year, then the interest earned on the contributions exceeding Rs 2.5 lakh will be taxable in the hands of an employee.

Can I increase my EPF contribution?

While the employer contribution is restricted at 12% maximum, an employee can increase his or her contribution through VPF. The interest rate on EPF is declared after the completion of the financial year.

Can EPF holder open PPF?

Only employees of companies registered under the EPF Act can invest in the EPF or PF. Both the employer and employee are required to contribute 12% of the employee's basic salary and dearness allowance every month to the EPF account. ... You can open a PPF account with the post office or most major banks.

Does it make sense to invest in VPF now?

Therefore, it will make sense to continue investing in VPF for long-term debt investments. “We are advising our clients to continue investing in VPF as even the post-tax return will be better than most other instruments," said Hegde.

Can I withdraw my VPF anytime?

There is no pre-fixed amount of withdrawal which can be made from a VPF account. However, withdrawals are possible only after completion of 5 years of continuous contributions in the scheme.