Recently this interest has been increased by EPFO. If you want to take full advantage of the increased interest rates of EPF, then you should increase your contribution in EPF. How can you increase this contribution? Know here-
If you are employed then you must be making your contribution to the Employees Provident Fund Organization i.e. EPFO. An amount of 12 percent of the employee’s basic salary and dearness allowance (DA) is deducted and goes into the EPF account. An equal amount is also deposited by the employer. Good interest is given in EPF. Through this, employees can arrange for a hefty retirement fund and pension.
Recently this interest has been increased by EPFO. Now EPFO members will get 0.10 percent more interest on contribution. Meaning, now you will be able to avail the benefit of 8.25% interest rate on PF account. If you want to take full advantage of the increased interest rates of EPF, then you should increase your contribution in EPF. How can you increase this contribution? Let us tell you-
This is how contribution in EPF will increase
If you want to increase contribution in EPF, then you will have to do this through Voluntary Provident Fund (VPF). Any EPFO member can avail the facility of contribution in VPF. There is no limit for salary deduction in VPF. If the employee wishes, he can also contribute up to 100 percent of the basic salary.
What is the method of investing in VPF?
The method of investing in VPF is exactly the same as that of depositing money in EPF, that is, if you start investing money in VPF, then its money will also be automatically deducted from your salary every month, like EPF is deducted. 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 completion of this process, you can start deducting money from your salary in VPF. Once you opt for VPF, it is mandatory to deposit money in it for at least 5 years.
Lock-in period and benefits
The lock in period of VPF is 5 years. No tax is deducted on withdrawals made after 5 years. 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 (E-E-E) 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. Apart from this, VPF account can also be transferred like EPF.
