You can invest more than 12% in PF like this, getting double the return as compared to the bank
Highlights
- Employees can increase the amount of Provident Fund
- benefit only for the employed
- Account is transferred on change of job
PF Account: We all want to secure our future. That’s why we save. We try to arrange money for the time when we get old and are not able to work physically. Then we spend our lives on the capital accumulated during puberty. For this, the government has made arrangements for EPF ie Employees Provident Fund. 12 percent of the salary of the salaried people is deducted as EPF. When this money grows with the help of compound interest, it becomes a huge amount. He becomes our support in the form of retirement amount. EPF is your investment in a way, which you make every month.
Those who want to make a safe investment other than EPF, they resort to Public Provident Fund. For this, they have to invest in the bank or post office or by opening a PPF account in the bank. But if you want to avoid this hassle that you also have the option of investing in VPF i.e. Voluntary Provident Fund. If you want, you can invest more than the amount stipulated for EPF. This is what we call VPF.
What is VPF
VPF is the acronym for Voluntary Provident Fund. It is an extension of EPF itself. In such a situation, only employed people can take advantage of it. In simple words, when you deposit extra money in EPF account, then it is called VPF. For this, there is no need to open a separate account like PPF. Let us understand it this way, suppose Rs 2000 of EPF is deducted from your salary. If you want to contact your HR and increase your contribution amount to 5000, then the extra money is VPF. Explain that it is different from 12 percent of EPF. In such a situation, if you contribute Rs 5000, then the employer will contribute only 12 of your basic salary.
benefit only for the job profession
Only those people who have EPF account can take advantage of this. There is no separate account for this. All you have to do is contact your HR and resolve to contribute more to your PF account. In such a situation, unemployed people and people in the unorganized sector cannot take advantage of this.
Employees can increase the amount of Provident Fund
Any employee can deposit more than the fixed limit of 12 percent in his PF account. For this, the employee can request his employer to put more amount in the PF account than the monthly salary. If he wants, he can also deposit 100 percent of his total basic salary in the VPF account.
how much interest will you get
VPF is actually your EPF account. It does not have a separate account. Therefore, the same interest is available on this as is available on the PF account. If the government is giving you 8.1 percent interest annually on your PF account, then the same interest will be paid on the VPF account. Although the rate of interest of PF keeps changing, but still more money is available in it than in PPF account.
How to open VPF account
No special hassle is required for this. You can easily invest extra money in VPF. For this, you have to contact the HR or finance team of your office and you can request for VPF there. After this, as much amount as you want will be added to the VPF.
Tax exemption and benefits on VPF
Voluntary Provident Fund account is also eligible for tax exemption like PF account, but only Rs 1.5 lakh in a financial year can be claimed tax exemption under section 80C of the Income Tax Act. However, the government has put a limit on the PF contribution. The government has fixed an investment limit of Rs 2.5 lakh in a year. Now you will have to pay tax on investments more than this. Money received from EPF or VPF and withdrawal made after completion of 5 years of service is not taxable.
Account is transferred on change of job
Apart from this, VPF funds can also be transferred like PF on change of job. The entire amount of this fund can be withdrawn only on retirement. Partial amount can be withdrawn from this account after 5 years of service. There is also an online claim facility for withdrawal of money.
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