Do you know about the Voluntary Provident Fund provided by EPFO? This is a better investment option for employed people. Know here why this is a profitable deal for you.
12 percent of the basic salary and DA of the employees working in the organized sector is deposited in their EPF account every month. The same amount of money is also deposited by the employer. EPF interest rates are fixed every year by the government. The annual interest has been fixed at 8.15 percent for the financial year 2023-24. Through EPF, any employee can collect a huge amount till retirement.
But do you know about the Voluntary Provident Fund (VPF) provided by EPFO? This is a better investment option for employed people. In this, employees get the same benefits which are available in EPF. If you are looking for an investment option where your money is safe and you also get high returns, then VPF can be a very profitable deal for you.
Know the 5 big benefits of investing in VPF
The first advantage of VPF is that the government gives you the same interest on it as you get on EPF account. That means, if you increase your contribution in PF account through VPF, then at present you will get interest at the rate of 8.15 percent, which is higher than any FD etc.
There is no limit on how much salary money has to be invested in VPF. If the employee wishes, he can also contribute up to 100 percent of the basic salary through VPF.
VPF account can also be transferred like EPF. But once you opt for VPF, it is mandatory to deposit money in it for at least 5 years.
The lock in period of VPF is 5 years. No tax is deducted on withdrawals made after completion of 5 years of service. However, if you withdraw VPF before this, you will have to pay tax on it as per your tax slab.
VPF interest and withdrawal amount are tax free. Therefore it is considered as Exempt-Exempt-Exempt (EEE) category investment. In VPF you get the benefit of tax exemption under Section 80C of the Income Tax Act. In this fund, you can claim tax exemption up to Rs 1.50 lakh in a financial year.
how to invest
If you are also interested in investing in VPF, then you will have to meet the HR of your company and tell him that you want to increase your investment in PF. With the help of HR, you can open your VPF account along with EPF.
You will have to fill a form and submit it to HR regarding how much contribution you want to increase in your salary. After this the process of linking your VPF account with EPF account will be completed. After this process is completed, you can start deducting money from your salary in VPF.
