Smart investments not only make you wealthy but also help to plan and achieve early retirement goals. But presently, seeing the volatility in the equity market people are drawing more towards small savings schemes. Building wealth through them is a slow and time taking process but it at least provides the assurance of securing your financial future with guaranteed returns. The most popular out of all the schemes is VPF or Voluntary Provident Fund for the fixed income benefits.
What is VPF or Voluntary Provident Fund?
VPF as the name sounds is a voluntary investment scheme, open to all salaried employees to save a small portion of their monthly salary. Presently the interest rate on VPF set by the Government is 8.10% per annum. Investors in this scheme can avail of tax deduction benefits under Section 80C of the Income-tax Act. Furthermore, interest earned on accumulated amounts is also tax-free on maturity.
How You Can Invest and Get More From VPF?
VPF deductions from your salary are only made if you voluntarily apply for it. So, EPF members can opt to contribute an additional provident fund instalment by registering for voluntary provident fund contributions. “For this, the employee needs to ask HR at the time of joining. However, in case an employee decides to choose VPF after joining, then he or she needs to inform the HR and accounts department of its recruiter before the beginning of a new financial year,” said Kartik Jhaveri, Director of Wealth Management at Transcend Capital.
However, remember that “ the employee must make sure that their annual contribution along with monthly EPF and monthly VPF doesn’t cross ₹2.50 lakh per annum. He added that going beyond this ₹2.5 lacks annual contribution limit, one’s return on the EPF contribution above ₹2.5 lacks will become taxable”, mentioned livemint.
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How You Can Check Your Mandatory EPF contributions?
- Your salary slip can be used to check mandatory EPF contributions.
- Another method is to calculate 12% of your basic salary and check your monthly EPF contributions accordingly.
