Get Instant Quote

Voluntary Provident Fund

Voluntary Provident Fund is a version of the traditional provident fund saving scheme wherein the investor applicants can invest above the 12% contribution factor that applies to their traditional EPF accounts. The voluntary PF option applies exclusively to salaried individuals . Aside from being an excellent tax saving option, voluntary PF will help the subscriber to invest specific amount and provide a long term savings option for those big life milestones or other planned financial contingencies. In recent times, Voluntary Provident Fund in India has proved to be quite a popular savings instrument, especially amongst the employed sections of the society.

The interest rate applicable to voluntary PF accounts is decided for each financial year by the government of India. Currently, for the fiscal year 2017-18  the voluntary provident fund interest rate is set at 8.65%. Combined with the fact that money  accumulated in the vpf account is eligible for tax deduction under section 80C of Income tax act, the impressive interest rate adds to the allure and is prompting more and more Indians to seriously consider the VPF contribution route.

Voluntary Provident Fund scheme is offered and managed by the Government of India. Thus, is termed as safe and trustworthy investment medium minus the risk that is usually associated with long term investment plans as offered by private playe

As it is Simple to Apply- All you must do is raise a request with your payroll/finance/HR team with regards to the opening of the VPF account. This can be done with a simple Voluntary Provident Fund Registration form and immediately after, your EPF account will serve as the new VPF account. Additionally, the account can be opened at any time through the financial year, though the start of the year is the rank favourite  for obvious tax saving purposes .

Amount invested in VPF can be withdrawn at retirement or resignation from current employment. Hence, these funds act as long term investments that come in handy when regular monthly income isn’t available.

Applying for the voluntary PF account is simple, and the associated regulations are easy to follow.

The following are the various rules and regulations governing the Voluntary Provident Fund scheme in India

Employee can contribute as much as 100% of his/her salary towards the VPF Account. This contrasts with the EPF account wherein he/she can contribute a maximum of 12% of his/her basic salary.

VPF is a subset of the Employee Provident Fund (EPF) wherein the only differentiating factor is the percentage of contribution that the concerned employee can appoint, as compared to the fixed 12% that applies to the EPF account. There is no separate account for VPF.

Only salaried employees, working for organizations recognized by the Employees’ Provident Fund Organization of India, can open and maintain a VPF Account. Self-employed individuals and people working in the unorganized sectors cannot open VPF Accounts.

Employers are under no obligation to contribute to their employees’ VPF portfolio.

VPF Accounts can be opened at any time through the financial year. However, investments to the same cannot be terminated/discontinued before the base tenure of 5 years is completed.

It’s always a good option to start a voluntary provident fund account at the start of the financial year as this helps in better financial planning and tax savings.

A depositor can ‘break’ his/her VPF account for a fixed number of reasons, including-

Medical treatments involving the account holder and/or his/her family member

Cost intensive events such as higher education and marriage.

For the construction/purchase of house/plot of land.

Home loan repayments.