Market Secrets – Tax Saving Series – EPF vs VPF vs PPF

What is EPF (Employee Provident Fund)?

• It is a pension fund which provides financial security and stability for employees in the future.
• Employees need to contribute a portion (12%) of their salaries every month.
• The savings are used at the time of retirement.
• The amount earns interest and is also eligible for a tax deduction.
• EPF is risk-free and is a good investment option for post-retirement.

Who can invest via EPF?

• EPF is compulsory for employers who have more than 20 workers and for workers with a basic salary more than Rs. 6,291.
• The employers also have to contribute the same amount as employees (12%).
• Government has moved on from EPF to NPS for its employees.

What is VPF (Voluntary Provident Fund)?

• Under this scheme, an employee can voluntarily give any percent of his or her salary to the PF account.
• The contribution has to be more than the EPF mandate of 12%.
• Maximum amount allowed is 100% of Basic
• It is not an obligation to contribute towards VPF.

Who can Invest via VPF?

• Holders of EPF account can invest in VPF
• The amount is credited to EPF scheme account as there is no separate account for VPF
• Interest is the same as EPF.

What is PPF (Public Provident Fund)?

• PPF is guaranteed by the government.
• It is a fixed income security scheme.
• It has a special objective of giving old age financial security to the non-salaried employees.

Who can Invest via PPF?

• Anybody can contribute to this, and it is risk-free.
• The interest received on the subscription is compounded. You earn interest on the interest earned.
• All the amount (investment and returns) is exempt from tax.
• Citizens belonging to the non-salaried (self-employed) category are applicable to open a PPF account. It can be opened at a bank or in Post Office. The assured high returns are also earned.

We have compared EPF vs VPF vs PPF and explained about this in detail in the video:
https://youtu.be/tOoRnah4dQA

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