{"id":7420,"date":"2025-07-03T12:38:58","date_gmt":"2025-07-03T12:38:58","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&#038;p=7420"},"modified":"2025-07-03T12:39:02","modified_gmt":"2025-07-03T12:39:02","slug":"voluntary-provident-fund-vpf","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/voluntary-provident-fund-vpf\/","title":{"rendered":"Voluntary Provident Fund (VPF)"},"content":{"rendered":"<h2 id=\"what-is-vpf\" class=\"wp-block-heading\">What is VPF?<\/h2>\n\n\n\n<p>The <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/voluntary-provident-fund-vpf\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Voluntary Provident Fund (VPF)<\/a> is an optional savings scheme for salaried employees in India. It allows you to contribute more than the mandatory 12% of your basic salary and <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/dearness-allowance\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">dearness allowance<\/a> (DA) that goes into the Employees&rsquo; Provident Fund (<a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/epf\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>EPF<\/a>). These additional contributions earn the same interest rate as EPF and are managed by the Employees&rsquo; Provident Fund Organisation (EPFO). <\/p>\n\n\n\n<h2 id=\"key-features-of-vpf\" class=\"wp-block-heading\">Key Features of VPF<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Voluntary Contributions<\/strong>: You can contribute up to 100% of your basic salary and DA. <\/li>\n\n\n\n<li><strong>Interest Rate<\/strong>: For the financial year 2025-26, the interest rate is 8.25% per annum. <\/li>\n\n\n\n<li><strong><a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tax\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>Tax<\/a> Benefits<\/strong>: Contributions up to &#x20B9;1.5 lakh per annum qualify for tax deductions under <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/section-80c\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Section 80C<\/a>. The interest earned and maturity amount are also tax-free, provided certain conditions are met.<\/li>\n\n\n\n<li><strong>Lock-in Period<\/strong>: There is a minimum lock-in period of 5 years. Withdrawals before this period may attract taxes.<\/li>\n\n\n\n<li><strong>Eligibility<\/strong>: Only salaried employees who are members of the EPF scheme can opt for VPF. <\/li>\n<\/ul>\n\n\n\n<h2 id=\"benefits-of-investing-in-vpf\" class=\"wp-block-heading\">Benefits of Investing in VPF<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Safe Investment<\/strong>: Being government-backed, VPF is considered a low-risk investment.<\/li>\n\n\n\n<li><strong>Higher Returns<\/strong>: The interest rate is generally higher than other traditional savings instruments like <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/fixed-deposit\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">fixed deposit<\/a>s.<\/li>\n\n\n\n<li><strong>Easy to Manage<\/strong>: Contributions are deducted directly from your salary, ensuring disciplined savings.<\/li>\n\n\n\n<li><strong>Portability<\/strong>: If you change jobs, your VPF account can be transferred to your new employer. <\/li>\n<\/ul>\n\n\n\n<h2 id=\"how-to-open-a-vpf-account\" class=\"wp-block-heading\">How to Open a VPF Account<\/h2>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Contact HR<\/strong>: Inform your employer or HR department about your intention to contribute to VPF.<\/li>\n\n\n\n<li><strong>Specify Contribution<\/strong>: Decide the percentage of your salary you wish to contribute.<\/li>\n\n\n\n<li><strong>Documentation<\/strong>: Fill out the necessary forms provided by your employer.<\/li>\n\n\n\n<li><strong>Start Contributions<\/strong>: Once processed, the specified amount will be deducted from your salary and credited to your VPF account.<\/li>\n<\/ol>\n\n\n\n<h2 id=\"withdrawal-rules\" class=\"wp-block-heading\">Withdrawal Rules<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>After 5 Years<\/strong>: Withdrawals after completing 5 years are tax-free.<\/li>\n\n\n\n<li><strong>Before 5 Years<\/strong>: Withdrawals before 5 years may attract taxes on the interest earned.<\/li>\n\n\n\n<li><strong>Partial Withdrawals<\/strong>: Allowed under specific circumstances like medical emergencies, education, or purchase of a house.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"tax-implications\" class=\"wp-block-heading\">Tax Implications<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Section 80C<\/strong>: Contributions up to &#x20B9;1.5 lakh are eligible for tax deductions under Section 80C. <\/li>\n\n\n\n<li><strong>Interest Income<\/strong>: Interest earned is tax-free, provided the total annual contribution (EPF + VPF) does not exceed &#x20B9;2.5 lakh. <\/li>\n\n\n\n<li><strong>Maturity Amount<\/strong>: Tax-free if withdrawn after 5 years of continuous service. <\/li>\n<\/ul>\n\n\n\n<h2 id=\"vpf-vs-other-savings-schemes\" class=\"wp-block-heading\">VPF vs. Other Savings Schemes<\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th>Feature<\/th><th>VPF<\/th><th>PPF<\/th><th>NPS<\/th><\/tr><\/thead><tbody><tr><td>Interest Rate<\/td><td>8.25% p.a.<\/td><td>7.1% p.a.<\/td><td>Market-linked<\/td><\/tr><tr><td>Tax Benefits<\/td><td>EEE<\/td><td>EEE<\/td><td>EEE (with conditions)<\/td><\/tr><tr><td>Lock-in Period<\/td><td>5 years<\/td><td>15 years<\/td><td>Till retirement<\/td><\/tr><tr><td>Contribution Limit<\/td><td>Up to 100% of salary<\/td><td>&#x20B9;1.5 lakh per annum<\/td><td>No upper limit<\/td><\/tr><tr><td>Risk Factor<\/td><td>Low<\/td><td>Low<\/td><td>Moderate to High<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>In summary, the Voluntary Provident Fund is an excellent option for salaried employees looking to enhance their retirement savings with the added benefits of tax exemptions and higher interest rates. Its government-backed nature ensures safety, making it a preferred choice for co<a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/nse\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>nse<\/a>rvative investors.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is VPF? The Voluntary Provident Fund (VPF) is an optional savings scheme for salaried employees in India. It allows you to contribute more than the mandatory 12% of your basic salary and dearness allowance (DA) that goes into the Employees&#x2019; Provident Fund (EPF). These additional contributions earn the same interest rate as EPF and [&#x2026;]<\/p>\n","protected":false},"author":9,"featured_media":0,"menu_order":0,"template":"","meta":{"footnotes":""},"class_list":["post-7420","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7420","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/9"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7420\/revisions"}],"predecessor-version":[{"id":7423,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7420\/revisions\/7423"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=7420"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}