New Delhi. The Reserve Bank of India (RBI) has reduced interest rates to provide relief to the people in the epidemic. Due to this, not only the loan became cheaper, but also the interest rates on other government savings schemes including FDs have come down. The Employee Provident Fund (EPF) is still getting the highest interest.
In almost all small government savings schemes including PPF, Sukanya, Kisan Vikas Patra (KVP), the interest rates have come down to below 8 percent. At the same time, interest of 8.5 percent is still being available on EPF. If you want to increase your contribution in EPF, then you can ask your company for Voluntary Provident Fund (VPF). Not only will you get 8.5 percent return on VPF too, but you can also take advantage of tax exemption.
Also read – Mark Zuckerberg gave advice to his employees – said, in the form of Meta and ..
What is VPF and how much you can invest
The employer is required to put 12% of the basic and DA of his employee in the EPF. Along with this, 12 percent of the share of the employee is also contributed. Above this, if the employee wants, then he can put 100 percent of his basic and DA in EPF. This additional contribution is called Voluntary Provident Fund. On this additional amount also, you will get 8.5% interest like EPF.
How to start VPF contribution
There is a very simple process for an employee to contribute to VPF. He just has to tell his employer that he wants to put a certain amount from his salary in the VPF account. In many companies, you are given a form for this, by filling it you can apply for more deduction. Companies start deducting the amount fixed by you.
Also read – Petrol Diesel Prices Today: Petrol-Diesel prices changed in many cities including Chennai, know what rate you are getting in your city
How much and how will you get tax exemption
The same rule of tax exemption applies to VPF as on Employee Provident Funds ie EPF. Tax deduction can also be taken on VPF under section 80C of Income Tax. However, some of its limit should not exceed Rs 1.5 lakh. It gets the benefit of EEE, which means that along with tax exemption on the amount invested, the interest earned on it and withdrawal on maturity is also tax free.
Helpful in building a big retirement fund
An employee who increases his contribution in the form of VPF helps a lot in building a large retirement corpus. If you use the entire limit of 80C as a contribution to VPF, then you can build a huge corpus on retirement. Since, it is getting a strong interest rate of 8.5 per cent, hence a large corpus can be created for long term investments.
Tags: epf, Epfo, Investment tips
Read Article in हिन्दी