EPF is a mandatory contribution from the salary of a job worker. Any ordinary Indian citizen (salaried or non-salaried) can invest in PPF. VPF is a voluntary investment scheme.
New Delhi. Young investors who want to deposit funds for their retirement can opt for any one of the Provident Fund schemes like EPF, PPF and VPF. While all these schemes guarantee a certain return on investment, they also get the benefit of tax exemption. This is the reason why Provident Fund schemes are the first choice for investors looking for risk-free investments in the long term.
All these three schemes are very attractive. This is the reason why almost everyone gets confused in choosing one of these. EPF is a mandatory contribution from the salary of a working person. Any ordinary Indian citizen (salaried or non-salaried) can invest in PPF. VPF is a voluntary scheme. It does not have a separate account. You have to invest in EPF account only.
EPF (Employee Provident Fund)
According to a report by CNBC TV18, any company that has more than 20 employees working here has to deduct the EPF of the employee. Under this scheme, the employee has to deposit a fixed amount of his salary in the EPF account.The employer also deposits the same amount in the EPF account of the employee. The purpose of EPF is to provide financial security to all the employees in future. Interest is earned on the amount deposited on EPF and tax exemption is also available in it.
Public provident fund
PPF is an investment scheme guaranteed by the government that offers a certain return and tax benefits. Salaried and non-salaried people can open PPF accounts. The employer does not make any contribution to PPF. The amount invested in the PPF scheme earns compound interest. One can invest in this scheme for 15 years.
VPF
Voluntary Provident Fund or Voluntary Provident Fund is a voluntary scheme. The money you invest in Provident Fund (EPF) of your own free will goes to VPF. This is different from the 12 per cent investment to be made in EPF. You can apply for VPF in your company to start a separate investment. Investing in Voluntary Provident Fund earns the same interest as Employees’ Provident Fund (EPF). Its interest rates are changed every year.
In which investment is more beneficial
Salaried employees always invest in EPF. Those who want to deposit more funds for retirement can invest more in this through VPF. He can deposit money separately in PPF. The decision to invest in either PPF or VPF depends on one’s investment ability and expectation of return on investment. At present, the return on VPF is 8.5 percent while in PPF it is 7.1 percent.
Since VPF is getting more interest, so by investing in it, you can create more retirement corpus at a faster rate. Yes, if an investor has to achieve any financial goal within 15 years, then investing in his PPF is beneficial. Those who have high income can invest in both VPF and PPF for tax free interest. Self-employed individuals can invest in PPF as it is a great way to save tax and accumulate huge funds in the long term.
