The core motive of the voluntary provident fund scheme is to save some part of the salary of an employee. Under this scheme, the employee can contribute a small portion of their salary to the provident fund account. This part of the salary is for non-mandatory consumptions.
Features of the VPF scheme
Voluntary contribution: VPF accelerates additional voluntary contributions toward saving. It is a mandatory process for the employee to make a small contribution to the Employee Provident Fund.
Higher interest rate: VPF provides a higher interest rate on savings as compared to other financial platforms. It is a type of fixed deposit which grows money faster.
Flexibility: The percentage of the amount that needs to be deducted can also be chosen by the user. It is very essential to check that you do not exceed the maximum limit.
Tax benefits: If an individual contributes to a voluntary provident Fund, they also are eligible for Tax benefits. It minimises the taxable income of the person.
Withdrawal policies: It is permitted upon the registration, recruitment or compilation of 5 years of service continuously. The withdrawals of such portals are allowed under specific circumstances such as education expenditure or other emergencies.
Advantages of Voluntery porvient Funds
Simple process: It is one of the easiest processes for managing your savings and fixed deposits. It does not have events that are affected by market fluctuations, so a user does not have to worry about losses.
Higher ROI: As compared to other retunes in fixed deposits or sayings, VPF has a higher interest rate.
Long-term saving: it is a long-term wealth option as it constantly collects small amounts from the salary and adds it to an Employee Provident Funds account.
Financial security: It gives a huge financial security to the employee. It assures the security and savings of the deposits. Giving peace of mind to the employee.
Document required to open VPF account
- Form 15/H
- Form 10
- Address proof
- Employment proof
- Bank account details
- Identity proof
The interest rate of VPF
Currently in India, the rate of VPF is 8.15% which was from the financial year 2023-2024. Such interest rate is set by the Employees Provident Fund organisation each year. Here is the list of interest rates for the last few years.
|
Year |
Interest Rate on VPF |
|
2018-19 |
8.65% |
|
2019-20 |
8.50% |
|
2020-21 |
8.50% |
|
2021-22 |
8.50% |
|
2022-23 |
8.15% |
Rules that need to be followed
Open to all salaried individuals: This scheme is eligible for all types of salaried employees under the government of India who give a contribution to the Employee Provident Fund
Not a mandatory fund: It is a choice of the employee to opt for a provident Fund or not
One can not discontinue such funds: An employee or employer cannot discontinue this scheme in the middle of the financial year
Request the employers to opt for VPF schemes: it is the responsibility of an individual to request their company or HRM to opt for a voluntary Provident Fund.
The interest rate changes every year: As per the benchmark set up by the government, the rate of VPF changes every year.
