EPF, VFP and PPF
EPF, VFP and PPF – Best Investment Option
Every individual has their retirement on the back of their mind. All their savings are basically 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 do 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 risk free and assured returns. This article would help the investor to understand the basics of EPF, VPF and PPF and the different aspects of the same.
EPF – Employee Provident Fund
Full form of EPF is Employee Provident Fund. Employers provident fund scheme is applicable to those employers who has employee base of 20 or more employees. Both employer and employee has 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 into 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
|Anyone (i.e. both salaried or non-
salaried employee), except NRI
|Investment Period||Upto retirement or
resignation (whichever earlier).
|15 years (can be further be extended
in block of 5 years).
|Upto retirement or
|Tax Benefit||Amount invested can be claimed as exemption under Section 80C of the Income Tax Act. Maturity amount is exempt from tax after continuous service of 5 or more
|Amount invested can be claimed as exemption under section 80C of the Income Tax Act. Maturity amount is exempt from tax.||Amount invested can be claimed as 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|