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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