What Is The Voluntary Provident Fund (VPF)?
VPF can be envisioned as the EPF’s extremely ambitious counterpart, the one that continually sets its goals even higher. In the case of EPF, it takes care of the compulsory retirement savings, while VPF allows you to voluntarily contribute more as if you are rewarding your future self with a great bonus.
On top of that, it is very interesting to know that during FY 2024–2025, the interest earned will be 8.25%, which is as dependable as EPF. In case you’re a salaried worker whose lotuses are like a worry-free retirement (perhaps a beach house?), then VPF would be your silent yet effective wealth-building assistant.
Are you ready to give your savings a little boost? Here is everything you should know
Voluntary Provident Fund (VPF): Key Features
| Feature | Details |
|---|---|
| Eligibility | Salaried employees already contributing to EPF. |
| Interest Rate (FY 2024–25) | 8.25% per annum (same as EPF). |
| Contribution Limit | Up to 100% of basic salary + dearness allowance (DA). |
| Tax Exemption on Contribution | Eligible for deduction under Section 80C up to ₹1.5 lakh annually. |
| Tax on Interest | Interest is tax-free if total EPF + VPF contributions do not exceed ₹2.5 lakh per year. |
| Withdrawal Taxation | Withdrawals are fully tax-free after 5 years of continuous service. |
| Employer Contribution | Employers are not required to match VPF contributions. |
What Are The Benefits Of Voluntary Provident Fund (VPF)?
Q1. Is VPF a risk-free investment?
Yes. VPF is a government-backed scheme, which means your money enjoys high safety and guaranteed returns, perfect for risk-averse savers.
Q2. Does VPF help in long-term wealth creation?
Absolutely. Since contributions earn steady interest over the years, VPF promotes disciplined, long-term savings, helping you build a strong retirement corpus without stress.
Q3. Is my VPF account transferable if I switch jobs?
Yes. Your VPF account moves with you. Thanks to the Universal Account Number (UAN), transferring your VPF across employers is smooth and hassle-free.
How To Withdraw Voluntary Provident Fund (VPF)?
- Full Withdrawal
- Allowed upon:
- Retirement
- Resignation
- Two months of continuous unemployment
- Allowed upon:
- Partial Withdrawal
- Permitted for:
- Medical emergencies
- Children’s education or marriage
- Purchase or construction of a house
- Permitted for:
Premature Withdrawal (Before 5 Years)
- Entire withdrawal (principal + interest) becomes fully taxable.
- TDS may apply.
(With Inputs)
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Aishwarya is a journalism graduate with over three years of experience thriving in the buzzing corporate media world. She’s got a knack for decoding business news, tracking the twists and turns of the stock market, covering the masala of the entertainment world, and sometimes her stories come with just the right sprinkle of political commentary. She has worked with several organizations, interned at ZEE and gained professional skills at TV9 and News24, And now is learning and writing at NewsX, she’s no stranger to the newsroom hustle. Her storytelling style is fast-paced, creative, and perfectly tailored to connect with both the platform and its audience. Moto: Approaching every story from the reader’s point of view, backing up her insights with solid facts.
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