Within the fixed-income area, Voluntary Provident Fund (VPF) is among the schemes by which staff can improve their contributions in the direction of the Provident Fund (PF). Investing well in PF, in return, not solely helps in producing wealth, but in addition in reaching early retirement plan objectives.
What’s Voluntary Provident Fund?
Open to any worker working in India, it offers a return of 8.10% every year. By investing on this scheme, individuals get tax advantages beneath Part 80C of the Earnings Tax Act; returns on maturity, too, will not be taxed.
Tips on how to make investments extra in VPF?
Because the identify suggests, VPF is voluntary; i.e., it is going to be deducted out of your wage solely after your approval. By selecting a VPF contribution, an Workers’ Provident Fund (EPF) account holder can select a further provident fund contribution.
The worker, nevertheless, ought to guarantee their annual contribution, together with month-to-month EPF and month-to-month VPF, shouldn’t be above ₹2.5 lakh every year. Past this restrict, the return on the EPF contribution turns into taxable.
How a lot to take a position by way of VPF?
For this, you first have to know your annual EPF contribution. This may be accomplished in two methods: by checking from pay slips, or calculating 12% of your primary wage.
Now, if a person’s month-to-month wage is ₹50,000, the necessary EPF will likely be ₹6,000. The annual EPF, subsequently, will likely be ₹72,000, and most VPF quantity will likely be ₹1.78 lakh ( ₹2.5 lakh- ₹72,000).