Curated By: Business Desk
Last Updated: September 26, 2023, 12:56 IST
There is no limit on investment in VPF.
VPF is a great savings plan, and it gives excellent returns helping save taxes.
To encourage long-term savings and financial security, the Indian government has introduced the Voluntary Provident Fund (VPF), a voluntary investment scheme that promises substantial returns and attractive tax benefits. VPF, designed to complement the Employee Provident Fund (EPF), offers several advantages for those looking to bolster their savings post-retirement.
1. A Big Plan with Triple E Benefits
VPF is a savings plan that ensures excellent returns and delivers substantial tax savings. Falling under the Triple E category, VPF provides tax exemptions on the invested amount, the total deposit, and the accrued interest. This unique feature makes it an ideal choice for individuals seeking to grow their wealth while minimizing their tax liability. VPF is a risk-free investment option that allows withdrawals anytime and facilitates hassle-free account transfers when changing jobs. Contributors can adjust their deposit amounts twice a year.
2. Safety Assured
One of the most compelling aspects of VPF is that it is government-operated, translating to zero risk of losing your hard-earned money. This safety net has made VPF an attractive choice for those looking to accumulate substantial funds over the long term.
3. High Returns Like EPF
VPF offers the same high interest rate as EPF, currently at 8.15 per cent. This interest rate surpasses the returns provided by many other savings schemes, making VPF a lucrative option for wealth accumulation.
4. Tax Benefits Galore
Under Section 80C of the Income Tax Act, taxpayers are entitled to tax exemptions on VPF contributions. It means not only the investments but also the total amount deposited and the interest earned on them remain tax-free. It’s important to note that the tax exemption is available for investments up to Rs 1.50 lakh annually.
5. Easy Withdrawal Options
VPF offers the convenience of both retirement and premature withdrawals, providing financial flexibility to its contributors. While funds can be withdrawn upon retirement or resignation, EPFO also offers premature withdrawal options. For premature withdrawals, certain conditions must be met, and tax exemptions are not applicable if funds are withdrawn within five years. This means that contributors have the freedom to access a portion of their VPF savings when necessary.
