The Voluntary Provident Fund (VPF) is one of the most reliable, government-backed savings schemes in India. It allows salaried employees to invest up to 100% of their basic salary and dearness allowance, above the mandatory EPF contribution. For FY 2024-25, the interest rate is 8.25% per annum, which is higher than most fixed deposits and small savings schemes. Contributions under VPF qualify for tax deductions up to ₹1.5 lakh under Section 80C, while the interest earned remains tax-free within limits. Withdrawals are flexible, transfer between jobs is seamless, and the safety is guaranteed by the government—making it a must-know retirement planning tool for every salaried person in India.
What is Voluntary Provident Fund (VPF)?
The voluntary provident fund is simply an extension of the Employee Provident Fund (EPF). While EPF requires employees to contribute 12% of their salary, VPF allows you to voluntarily contribute more than 12%, even up to 100% of your basic salary plus dearness allowance. This extra contribution grows steadily at the government-declared interest rate.
How Does Voluntary Provident Fund Work?
- Contribution: You can choose how much extra you want to put into your VPF above your normal EPF contribution.
- Interest Rate: The government sets this annually. For FY 2024-25, the rate is 8.25%, compounded every year.
- Account Management: No new account is needed—your EPF passbook tracks your VPF too.
- Transferability: If you change jobs, your VPF balance moves with your EPF balance.
Latest Update on Voluntary Provident Fund (2024-25)
- Interest Rate: 8.25% (one of the highest safe returns).
- Tax Deduction: Contributions up to ₹1.5 lakh under Section 80C.
- Tax-Free Interest: Up to ₹2.5 lakh contribution per year, unless withdrawn before 5 years.
- Withdrawal: Allowed after 5 years tax-free, or earlier for special needs like education, marriage, or medical treatment.
Who Can Invest in Voluntary Provident Fund?
- Only salaried employees working in organizations registered with EPFO.
- Not available for self-employed professionals or workers in the unorganized sector.
- The nominee or legal heir receives the entire amount in case of death.
Why Choose Voluntary Provident Fund?
- Risk-Free: 100% government-backed.
- High Returns: At 8.25%, it beats most fixed deposits and small savings schemes.
- Flexibility: Contribute as much as you want up to 100% of salary + DA.
- Tax Benefits: Saves money while growing wealth.
- Retirement Security: Builds a strong, safe corpus for the future.
Must-Know Benefits of Voluntary Provident Fund
- Easy Transferability: Seamlessly moves when you change jobs.
- Loan Facility: Partial withdrawals/loans possible under certain conditions.
- Nominee Protection: Your family is financially secure if something happens to you.
- No Separate Account Hassle: Managed through your EPF.
Table: Quick Facts about Voluntary Provident Fund (VPF)
| Feature | Detail |
|---|---|
| Interest Rate | 8.25% (FY 2024-25) |
| Who can invest | Salaried employees with EPF account |
| Contribution limit | Up to 100% of basic + DA (above EPF) |
| Tax benefit | ₹1.5 lakh deduction under 80C; tax-free interest (within limit) |
| Lock-in period | 5 years for full tax-free status |
| Withdrawals | Allowed for specific needs; full withdrawal after 5 years |
| Safety | Government-backed, risk-free |
| Transferability | Easy, between employers |
| Best for | Long-term, safe retirement savings & tax planning |
Capital Gurukul – Why Learn From Us?
At Capital Gurukul, we don’t just explain financial concepts—we make you masters of money. While others simply tell you that voluntary provident fund is safe, we teach you how to integrate it with smart investing and trading so that your money doesn’t just sit, but grows strategically.
- We provide financial education, trading courses, and mentorship to help you build wealth.
- You can even become our sub-broker partner and set up your own business with us.
- If you don’t learn finance and trading now, you risk losing opportunities while others multiply their money.
- Remember: Not learning from Capital Gurukul is your biggest financial loss.
Final Thoughts
The voluntary provident fund is not just another saving scheme—it’s a must-try, must-know plan for every salaried employee who wants a secure future, high returns, and tax savings. But to maximize its benefits and combine it with other wealth-building tools, you need the right guidance. And that’s where Capital Gurukul stands above the rest.
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