Similar to PF, workers can deposit their cash in VPF.
Annual curiosity is given to the staff on their PF cash.
Employee Provident Fund is a obligatory retirement scheme for all working folks. Any firm that employs greater than 20 folks has to mandatorily deduct 12 % of the fundamental wage of every worker each month and deposit a most of 12 % within the PF account of the staff. Annual curiosity is given to the worker on this cash. But if the worker needs to take a position extra, then together with the PF account, they’ll additionally deposit cash within the Voluntary Provident Fund (VPF).
Similar to PF, workers can deposit their cash in VPF. However, a VPF permits an employed individual to deposit as a lot as his full wage into the account plus allowances as a substitute of simply 12 %. The curiosity on a VPF is just like PF however since bigger quantities are allowed to be deposited within the account, the returns are barely higher.
VPF is a good financial savings software for individuals who wish to safe their post-retirement life. Not solely does it have a fantastic rate of interest for returns however it additionally helps in saving tax deductions. Since it comes beneath the Triple E class funding plan, it’s exempt from taxes which means that the overall deposit quantity and the curiosity will all be yours and no a part of it is going to go to the federal government.
The risk-free funding plan allows you to withdraw cash at any cut-off date. The VPF account is linked to the Aadhaar, and it’s simple to switch your VPF account from one firm to a different on altering your job. This is as a result of the VPF is managed by you rather than the corporate.
If your annual EPF contribution is lower than Rs 2.50 lakh, then it is best to begin investing in VPF instantly. If you make investments Rs 12,500 each month in EPF, then your annual funding will likely be Rs 1.5 lakh solely. This means you possibly can make investments Rs 8,333 extra each month in VPF.
This method, you may get an 8.1% tax-free return on Rs 2.5 lakh each year. You can change the quantity deposited in VPF twice a yr. However, for this, it’s a must to contact the HR/Finance division of your organization.
Read all of the Latest Business News, Tax News and Stock Market Updates right here
