Provident Funds: Here’s How You Can Earn Maximum Interest on Your PF Balance

News about Provident Fund (PF): Smart investing not only helps you create wealth, but also helps you achieve your goals in your early retirement plan. Seeing the volatility in the stock market, people are turning to small, Government-backed savings schemes to make money. One such way is to increase your contribution to the Provident Fund (PF). VPF or Voluntary Provident Fund is still a good option in the field of fixed income.

VPF or Voluntary Provident Fund

VPF is open to any employee working in India and gives a profit of 8.10% per year. Investors in this program receive tax benefits under Section 80C of the Income Tax Act, plus interest at maturity is also tax-free.

How can a salaried person invest more in PF?

VPF only deducts your salary if you want. EPF account holders can choose to contribute additional savings in their EPF account by choosing to make voluntary savings contributions. “For this, employees need to ask HR at the time of joining. However, in the event that an employee decides to choose VPF after joining, he or she needs to notify HR and the employer’s account before the start of a new financial year,” said Kartik Jhaveri, Director — Asset Management at Transcend Capital said.

Under the income tax law, the interest earned and the amount due of the VPF is tax free.

SEBI registration tax and investment Expert Jitendra Solanki believes that employers will not have problems if employees decide to VPF because employers will not have to contribute monthly in the amount of the employee’s contribution to VPF.

However, employees must ensure that their annual contribution, together with the monthly EPF and monthly VPF, does not exceed $2,500 thousand per year. He added that beyond this $Annual contribution limit 2.5 lakh, one person’s interest on above EPF contribution $2.5 lakhs will be taxable.

How to check required EPF contributions

1) You can check required EPF contributions from your payslip.

2) The second way is that you calculate 12% of base salary to know the required EPF contribution.

How much can you invest through VPF

Once you know your required annual EPF contribution, subtract the same amount from $2.5 lakh to know how much you can invest via VPF. Calculate your annual VPF contributions Suppose you earn $Basic salary 50,000/month. Compulsory EPF contribution to $6000 per month (12% of $50,000). The annual EPF contribution is $72,000 ( $6000 X 12). The maximum amount that you can invest through VPF will be $1,78,000 ( $minus 2.5 thousand $72,000) in a financial year.

VPF individuals can volunteer to contribute any portion of their salary to VPF. Provident Fund. Contribution must be above 12% of basic salary. However, the employer is not required to contribute any money to the VPF.

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