VPF scheme nonetheless a very good possibility for workers

Interest charges are at a historic low, which has resulted in lots of long-term debt funding devices providing low charges. However, in FY21, the Employees’ Provident Fund (EPF) earned an rate of interest of 8.5%. It is among the many highest charges being supplied by long-term debt-saving devices.

Last 12 months additionally, it supplied an identical charge, however it’s typically seen that rates of interest on provident funds are increased than different comparable debt devices akin to public provident fund (PPF).

So, if you wish to contribute extra in the direction of your provident fund, you possibly can select to speculate via a voluntary provident fund (VPF).

Through VPF, an worker can contribute a sum increased than the obligatory 12% from one’s wage underneath EPF.

The rate of interest on VPF is identical as EPF, which the federal government often declares in the direction of the tip of a monetary 12 months. VPF additionally provides the identical tax advantages as EPF. It falls underneath the exempt-exempt-exempt (EEE) tax construction—you get tax deduction profit on the time of funding, and there’s no tax payable on accrual or withdrawal.

When you alter jobs, you may also transfer your VPF funds similar to you progress EPF. Both are linked to a Universal Account Number (UAN). The withdrawal guidelines are the identical.

In Budget 2021, the federal government has made curiosity on an worker’s contribution above ₹2.5 lakh taxable.

However, consultants consider that VPF will proceed to stay a lovely possibility on condition that its post-tax return will probably be higher than lots of the conventional mounted devices akin to financial institution mounted deposits.

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