Kolkata: The Employees’ Provident Fund, or EPF, is one of the most effective social safety schemes for personnel in operation in India.
In case you suppose EPF is an appealing and useful scheme, you have every motive to fall for the VPF, or Voluntary Provident Fund scheme. As indicated by way of the call itself, VPF is voluntary and now not compulsory like EPF.
But like the EPF, it has the same entity administering it — the Employees’ Provident Fund Enterprise, or EPFO. It's far governed by way of the identical rules, and, most crucial, VPF enjoys the identical diploma of safety as does EPF. Perhaps the most vital factor is that VPF enjoys the equal fee of hobby as EPF. In the last 12 months, the charge of hobby applicable to EPF has become 8.25%. VPF, too, became subject to the equal fee. The appeal lies in the reality that there may be, infrequently, an extended-term guaranteed-go-back charge for the hobby, which is excessive. It was 8.25% in FY24. If one compares it with the charge of interest in the Public Provident Fund (PPF), one unearths the VPF price changed into a 1.15 percentage factor better than that of the PPF.
Tax exemption
Another factor of appeal of VPF is that, like PF and PPF, Voluntary Provident Fund, too, is categorized as an EEE investment. It means the whole contribution, fundamental and hobby, is exempt from earnings tax. Consequently, the employee who puts his/her money in VPF can construct a corpus with the very best safety and one of the highest fees of interest in the long run. However, if the contribution exceeds Rs 2.5 lakh a year, the hobby income is taxed. Also, if one withdraws VPF cash earlier than the expiry of five years, the withdrawals are taxed.
Most contribution
One of the most thrilling factors of VPF is that it has been given no ceiling for investment. EPF contribution is at a uniform 12% of the fundamental salary + DA (dearness allowance) of an employee. None can boom or lower this contribution. But VPF does not have one of these restrictions. A worker merely wishes to jot down to his/her agency’s human aid department specifying the quantity that should be deducted from the profits and installed a VPF account. He/she is free to specify any quantity that he/she desires in keeping with the monetary needs. Another factor to bear in mind is that there's no particular time when you may start a VPF account. It could be begun at any time of the 12 months.
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