Voluntary Provident Fund - All you need to know

 Voluntary Provident Fund 

Voluntary Provident Fund (VPF) is another rearranged version of the conventional provident fund. It is another investment funds scheme for building a retirement corpus. It is otherwise called the Voluntary Retirement Fund. Just salaried employees are qualified to put resources into this scheme. 

Explanation and Scheme 

As the name recommends, VPF is a voluntary contribution from the employee towards their provident fund account. In this scheme, it isn't obligatory for a 12% contribution by the employee towards their provident fund. Notwithstanding, employees can do it willfully. An employee can likewise contribute up to 100% of their fundamental pay and dearness remittance in this scheme. The employer doesn't have to add to this scheme; it exclusively relies upon the employer's decision for any extra contribution. 

The interest of VPF is like the EPF scheme. The pace of interest of VPF is chosen by the Government of India consistently. Employers or employees don't have to add to this fund. Likewise, this fund has a lock-in time of 5 years. In the event that, the giver wishes to pull back money (fully or halfway) before finish of 5 years; at that point this sum is dependent upon taxation. 

Withdrawal 

For the most part, when an employee resigns or leaves an occupation, the whole sum in the fund is payable. If there should arise an occurrence of the inconvenient passing of the account holder, the chosen one can guarantee the sum in VPF. The principle advantage of this fund is that it permits withdrawals whenever. 

Moreover, VPF additionally permits incomplete withdrawal as advances. If there should arise an occurrence of any unanticipated money related conditions, employees can pull back from their VPF account. For occurrences, a portion of the reasons can be -

• Installment of credits 
• Wedding 
• Youngsters instruction 
• Health related crisis 
• Acquisition of new house/land 
• Installment for lodging credit 

Nonetheless, in the event that one pulls back the sum before five years, at that point it is taxable in the possession of the employee. The other way around, in the event that one pulls back the sum following five years, the taxation is equivalent to EPF. Additionally, it falls under the EEE taxation system. Notwithstanding, the exclusion is just up to a furthest reaches of INR 1.5 lakhs under Section 80C as it were.

Special Thanks

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