You asked: Who can invest in VPF?

VPF scheme can be availed only by salaried professionals enrolled with the EPF. If the direct tax code comes into effect, the entire maturity amount becomes taxable. You can contribute 100% of basic plus dearness allowance as investment in VPF.

Who can open VPF?

Only salaried individuals can sign up for VPF whereas PPF is for both salaried and non salaried individuals. An employee who wants to increase his retirement savings can tell the employer to deduct a certain percentage above the necessary 12% of basic pay and dearness allowance that goes towards EPF account.

Is VPF and EPF account same?

VPF is an extension of the Employees’ Provident Fund (EPF). … Moreover, since it accumulates in the same account as that of EPF, they both carry similar interest rates. Therefore, currently, the interest rate is 8.5%, cut short by 1.5% from the previous rate.

Which is better PPF or VPF?

A VPF account is only meant for salaried employees while a PPF account can be opened by self –employed and people working at unorganized sectors.

Difference between PPF & VPF.

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Features PPF VPF
Employer Contribution N.A N.A
Taxation on Maturity Returns None Tax Free
Tax Deduction As per section 80 C As per section 80 C

Is it good to invest in VPF?

Through VPF, an employee can contribute a sum higher than the mandatory 12% from one’s salary under EPF. … VPF also gives the same tax benefits as EPF. It falls under the exempt-exempt-exempt (EEE) tax structure—you get tax deduction benefit at the time of investment, and there’s no tax payable on accrual or withdrawal.

What is VPF salary?

VPF is the extension of EPF. In an EPF account, a person has to mandatorily give 12% of his Basic Salary and Dearness Allowance towards the fund. In a VPF, it is a voluntary contribution with the maximum limit at 100%.

Is VPF can be withdrawn anytime?

You cannot discontinue or withdraw out of a VPF scheme in the middle of the year. VPF scheme can be availed only by salaried professionals enrolled with the EPF. If the direct tax code comes into effect, the entire maturity amount becomes taxable.

What is the lock in period for VPF?

Lock-in period

As per Voluntary Provident Fund withdrawal rules, contribution to a VPF account is subject to a maturity period of 5 years. Therefore, an individual cannot withdraw any sum from their Voluntary Provident Fund before the completion of 5 years sans repercussions.

Is VPF tax-free?

The VPF contributions too enjoy the same tax norms that EPF contributions do. The taxpayers can deduct up to Rs 1,50,000 a year by investing in VPF. The interest earned on VPF is tax-free and withdrawals made after a period of five years are also made tax-exempt.

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Can I invest in both PPF and VPF?

Both the VPF and PPF suit long-term goals.

If you fall in the higher income tax bracket and are looking to invest larger amount in fixed income investment options with tax-free return, then you can utilise both the options together.

How is VPF calculated?

EPF/VPF Contributions – Employee and Employer

Pay 12% of basic pay minus 8.33% of Rs. 15000 as an employer contribution to EPF. 3.67% of Rs. 15000.

How do I check my VPF balance?

You can simply give a call on 011-22-901-406 to check your VPF balance.

Should I continue with VPF?

Therefore, it will make sense to continue investing in VPF for long-term debt investments. … Melvin Joseph, Sebi-registered investment adviser and founder, Finvin Financial Planners, added: “For those in the higher tax bracket, VPF will remain a good option within the debt category.”

Can govt employees invest in VPF?

When compared to an EPF account, employees are allowed to contribute 100% of their basic salary and dearness allowance towards a VPF account. It is not compulsory for employees to contribute to a VPF account. The Indian Government decides the rate of interest of a VPF account at the start of the financial year.

Should you stop investing in VPF?

Most experts are advising their clients to continue investing in VPF as it is currently offering an interest rate of 8.5%, which is much higher than the interest rate being offered by small savings schemes such as public provident fund (PPF).

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