PF Tips: The secret to create a strong PF fund will double your profit...

If you are employed, every month a part of your salary (12%) is deducted and deposited in the EPF account for your future. Your company also deposits the same amount. The government is currently giving a great interest of 8.25% on this deposit, which is more than many government schemes. Obviously, with this interest, a big fund can be created for you in the long run. But do you know that you can take even more advantage of this huge interest? Today, we are telling you the method by which you can collect the interest on your EPF in the true sense.

What is this 'secret' method?

The name of this method is Voluntary Provident Fund (VPF). As the name suggests, it depends on your wish. This is an extension of EPF, in which you can deposit more money in your EPF account as per your wish. The best thing is that you get the same interest on VPF (i.e., 8.25%) as on EPF. In a way, it is a great way to boost your savings.

How much money can be put in VPF?

There is no upper limit. According to the rules, an employee can deposit up to 100% of his basic salary and dearness allowance (DA) in VPF. Whereas your contribution to EPF is limited to only 12%. That means, if you want to save more and do not want to take the risk of investing elsewhere, then VPF is best for you.

How to start investing in VPF?
This process is very easy. All you have to do is contact the HR department of your company. Tell them that you want to increase your PF contribution through VPF. HR will give you a form in which you have to tell how much extra part of your salary you want to deduct from VPF. After submitting the form, your company will complete the process of VPF along with your EPF account, and from the next month, the fixed amount will start getting deducted from your salary.

What are the rules for withdrawing money?

The rules of VPF are exactly like EPF. You can withdraw the entire amount of your VPF only after retirement. After the completion of the lock-in period of 5 years, you can withdraw some money if needed. Such as for children's education, marriage, or house construction. If you change jobs, then the VPF account is also easily transferred to the new company along with your EPF account.

You will also get great benefits in taxes

VPF is also a great option for investment because it comes under the E-E-E (Exempt-Exempt-Exempt) category. This means exemption on investment, exemption on interest and exemption on withdrawal as well.

What is the difference between EPF and VPF?
EPF is a mandatory contribution of 12% deducted from your salary. VPF is an additional contribution over and above this 12% which you can make at your discretion.

Does the company also contribute the same amount to VPF?

No, the company's contribution is limited to your 12% EPF share only. VPF is contributed by you only.

Is the interest on VPF always equal to that on EPF?

Yes, the interest rate that the government announces for EPF every year applies to VPF as well

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.