More returns than FD & no tax

Voluntary Provident Fund (VPF) is a type of provident fund where an employee can voluntarily contribute more than the mandatory contribution towards their Employees' Provident Fund (EPF). The VPF scheme is an extension of the EPF and is regulated by the Employees' Provident Fund Organisation (EPFO) in India.

The benefits of VPF are as follows:

• Higher returns: VPF offers higher returns than other fixed-income investment options such as fixed deposits or government bonds. The interest rate on VPF is the same as that of EPF, which is currently at 8.5% per annum.

• Tax benefits: VPF contributions qualify for tax deductions under Section 80C of the Income Tax Act, up to a maximum of Rs. 1.5 lakhs per annum. Additionally, the interest earned on VPF is tax-free.

• Long-term savings: VPF is a long-term savings scheme, which encourages employees to save for their retirement.

• Flexibility: VPF allows employees to contribute any amount of their choice, subject to a maximum of 100% of their basic salary and dearness allowance. They can also choose to stop or increase their contributions at any time.

• Nomination: Employees can nominate their family members as beneficiaries of their VPF account in case of their untimely demise.

Overall, VPF is an excellent investment option for employees who want to save more towards their retirement and earn higher returns.