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Unlocking the Power of VPF

Unlocking the Power of VPF: A Comprehensive Guide


In the world of financial planning and employee benefits, the Voluntary Provident Fund (VPF) stands out as a valuable investment option. VPF allows employees to contribute an additional sum beyond the mandated Employee Provident Fund (EPF) limit of 12%. In this guide, we will delve into the intricacies of VPF, exploring its features, benefits, and considerations for employees looking to maximize their savings

Understanding VPF

Voluntary Nature of Contributions

  • VPF is a voluntary scheme where employees can contribute an amount of their choice over and above the 12% EPF limit.
  • There is no specific obligation regarding the contribution amount, providing flexibility to employees.

Eligibility and Contribution Limits

  • Employees can contribute their total basic salary and dearness allowance towards VPF
  • While there is no prescribed minimum or maximum limit, the total contribution (EPF + VPF) should not exceed the employee’s total salary.

Interest Rates

  • The interest earned on VPF contributions is the same as that earned on EPF contributions
  • The interest is compounded annually and is credited to the employee’s EPF account.

Linkage to EPF Account

  • To invest in VPF, having an EPF account is mandatory. The VPF contributions are linked to the employee’s EPF account.

Tax Implications

  • VPF contributions are eligible for tax benefits under Section 80C of the Income Tax Act, providing employees with an avenue to save on taxes

Benefits of VPF

Higher Interest Earnings

  • VPF offers a lucrative opportunity for employees to earn a higher rate of interest on their additional contributions.

Tax Savings

  • VPF contributions are tax-deductible, allowing employees to reduce their taxable income

Long-Term Wealth Creation

  • By contributing a higher percentage of their salary, employees can accelerate their wealth creation and accumulate a substantial corpus over the long term.

Considerations for Employees

Assessing Financial Goals

  • Employees should assess their financial goals and capacity to determine an optimal VPF contribution.

Reviewing Other Investment Avenues

  • While VPF is a robust savings option, employees should also consider diversifying their investments across other avenues for a well-rounded portfolio.

Understanding Withdrawal Rules

  • It’s essential to be aware of the withdrawal rules and implications to make informed decisions about accessing the accumulated corpus.


Voluntary Provident Fund is a powerful tool for employees to enhance their savings and build a secure financial future. By understanding the features, benefits, and considerations, individuals can make informed decisions aligned with their financial goals.

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