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EPF, VFP and PPF – Best Investment Option

Every individual has their retirement on the back of their mind. All their savings are proposed to be used to help them out at the time of their retirement life. In order to overcome all the required expenses and to live the retirement life freely and happily, one has to perform a steady and safe investment. EPF, VPF and PPF are some of the best investment options which can be looked upon by an employee. Investment under EPF, VPF and PPF offer a risk free and assured returns. This article would help the investor to understand the basics of EPF, VPF and PPF and the different aspects connected with each of these.

EPF – Employee Provident Fund

Full form of EPF is Employee Provident Fund. Employers provident fund scheme is applicable to those employers who have an employee base of twenty or more employees. Both employer and employee have to contribute under EPF. The said fund is created with a purpose to provide financial security and stability in future. Under this plan, every month, employees save a fraction of their salaries so that the same can be used at the later retirement stage of their life. Generally, the contribution would be 12% of basic salary + dearness allowance. Please note that the contribution is to be done by both employer and employee.

PPF – Personal Provident Fund

Full form of PPF is Personal Provident Fund. PPF is a statutory scheme initiated by the Central Government with the special objective of providing old-age financial security to the unorganized sector/self-employed (non-salaried employees). The person who has contributed to PPF account gets back risk free and assured returns. Interest earned on PPF investment is re-invested i.e. you can earn interest on both amount deposited and amount of interest re-invested.

VPF – Voluntary Provident Fund

Full form of VPF is Voluntary Provident Fund. VPF account is another investment option that helps a salaried individual to save more towards their retirement, apart from the mandatory deduction of 12% of the basic salary under EPF. Voluntary Provident Funds can be accessed by salaried individuals only. However, employers cannot force an employee to contribute to VPF. It is a voluntary move taken by an employee.

EPF vs PPF vs VPF

Particulars	EPF	PPF	VPF
Eligibility	Only salaried employees.	Anyone (i.e. both salaried or non-salaried employee), except NRI	Only salaried employees.
Investment Period	Upto retirement or resignation (whichever earlier).	15 years (can be further be extended in a block of 5 years).	Upto retirement or resignation (whichever earlier).
Tax Benefit	The amount invested can be claimed as an exemption under Section 80C of the Income Tax Act. Maturity amount is exempt from tax after continuous service of 5 or more years.	The amount invested can be claimed as an exemption under section 80C of the Income Tax Act. Maturity amount is exempt from tax.	The amount invested can be claimed as an exemption under Section 80C of the Income Tax Act. Maturity amount is exempt from tax after continuous service of 5 or more years.
Withdrawal Facility	Allowed	Partial withdrawal allowed	Allowed
Loan Against Investment	Available	50% loan allowed after completion of 6 years.	Available