If you want to increase your investment to take advantage of the higher interest rates of EPF, you cannot do so directly. But there is a way through which you can increase your contribution and get the same interest and all the benefits as EPF.
12 percent of the basic salary and dearness allowance (DA) of people working in the organized sector is deducted and goes into the PF account. An equal amount is also deposited by the employer. A good interest is given by the government on this. If you want to increase your investment in EPF to take advantage of higher interest rates, you cannot do so directly.
But through Voluntary Provident Fund (VPF), you can also increase your contribution in EPF and can avail the same interest on your investment which you get on EPF. At present, interest is being given on VPF at the rate of 08.15 percent. Know all the important information related to VPF.
How much money can be deposited in VPF
Any EPFO member can avail the facility of contribution in VPF and increase his contribution in the provident fund. 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. 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.
How to start investing
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. Once you opt for VPF, it is mandatory to deposit money in it for at least 5 years.
What are the rules for withdrawal of funds?
The interest and benefits received on VPF amount are the same as in EPF, similarly the rules for withdrawal of money are also the same as in EPF. You can withdraw the entire amount of VPF fund only after retirement. After 5 years, when its lock-in period ends, you can withdraw partial amount from it. Claim for this can be made online.
Tax exemption and account transfer
If you change your job, PF account can also be transferred like EPF. On investing in VPF, there is no tax to be paid on its interest and withdrawal amount. Therefore it is considered as Exempt-Exempt-Exempt (E-E-E) category investment. In this, one gets 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.
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