What is VPF, how to start contribution to Voluntary Provident Fund, check VPF benefits, interest rate, withdrawal rules

12% of the basic salary and DA of the employees working in the private sector is deposited in their EPF account every month and the same amount is deposited by the company as well. But if an employee wants to increase his contribution in EPF, is there any option for him? Know here-

12% of the basic salary and DA of the employees working in the private sector is deposited in their EPF account every month and the same amount is deposited by the company as well. Employees are given a good interest on the amount deposited in EPF. Currently, interest is being given at the rate of 8.25 percent. In such a situation, this contribution given for a long time helps in creating a good retirement fund. But if an employee wants to increase his contribution in EPF, is there any option for him? Let us tell you the way by which you can easily increase your contribution to the PF fund and can add a lot of money by taking advantage of better interest rates.

This is how the contribution to PF will increase

If you want to contribute more than 12 percent to EPF, then you can do so through Voluntary Provident Fund (VPF). There is no limit for salary deduction in VPF. If the employee wants, he can also contribute up to 100 percent of the basic salary. The government gives you interest on VPF equal to the interest you get on EPF account. In such a situation, you can collect a huge amount through VPF along with strong returns.

You will also get these benefits from VPF

• Being a government scheme, it gives you guaranteed returns. At present, the interest of EPF is 8.25%, this interest is much better than bank FD, PPF and all other government schemes. In such a situation, if you increase your contribution to PF, then by the time of retirement you will accumulate a good amount of money.
• The interest and withdrawal amount of VPF is tax free. Therefore, it is considered an 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 of up to Rs 1.50 lakh in a financial year.
• 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 withdrawal made after completion of 5 years of service. However, if you withdraw VPF before this, you will have to pay tax on it according to your tax slab.

Also Read- EPFO: Employees will know immediately whether their PF money has been deposited or not, know government’s plan

How to invest

If you are also interested in investing in VPF, then you 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 also open your VPF account along with EPF. You have to fill a form and give it to HR about how much contribution you want to increase from your salary. After this, the process of your VPF account will be completed along with the EPF account. After this process is completed, you can start deducting money from your salary in VPF.

Withdrawal rules

The same rules are applicable for withdrawal of VPF fund as are made for EPF fund. You can withdraw the entire amount of VPF fund only after retirement. After 5 years, when its lock in period ends, then you can withdraw a partial amount from it. For this, a claim can be made online.

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