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Do you invest in VPF ? Interest @8%+ tax free?

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I hope you guys also park money in VPF. The interest earned is tax free on amount contributed by employee (epf+ vpf).

Govt guarantee + high interest rate + no tax is a great combo

I advise monthly contribution ~10k

Lock in - 5 yrs

Know the Tax Efficiency of Voluntary Provident Fund

VPF is a further extension of EPF. Under VPF, the employees contribute a higher amount than the minimum requirement of 12% of their basic salary.
cleartax.in
 
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CREDITDATA said:
I hope you guys also park money in VPF. The interest earned is tax free on amount contributed by employee (epf+ vpf).

Govt guarantee + high interest rate + no tax is a great combo

I advise monthly contribution ~10k

Lock in - 5 yrs

Know the Tax Efficiency of Voluntary Provident Fund

VPF is a further extension of EPF. Under VPF, the employees contribute a higher amount than the minimum requirement of 12% of their basic salary.
cleartax.in
Click to expand...
I think earlier there was no limit and many higher salary level guys used this route for getting 8% tax-free. But my understanding is now there is a limit to which one can earn interest before being taxed. Kindly correct me if wrong.
 
CREDITDATA said:
I hope you guys also park money in VPF. The interest earned is tax free on amount contributed by employee (epf+ vpf).

Govt guarantee + high interest rate + no tax is a great combo

I advise monthly contribution ~10k

Lock in - 5 yrs

Know the Tax Efficiency of Voluntary Provident Fund

VPF is a further extension of EPF. Under VPF, the employees contribute a higher amount than the minimum requirement of 12% of their basic salary.
cleartax.in
Click to expand...
There are some limitations…EPF + VPF can’t cross some X amount. Not sure what’s the limit.
 
My personal opinion - Its mostly good for tax purpose, I often think its both good and bad tbh.. good being all the things u mentioned..

bad being -
- It will give you less liquidity when you recieve your salary as VPF is taken directly from your payslip(basically you will give tds(30%), epf(24%) and then vpf on top)...
- you dont invest it at your own discretion like PPF so no freedom.
- This is not a good for ritirement prespective.
- govt can decrease the interest rate at any year in future, so less garuntee for upcoming year

Specially if people have loans and other spends, VPF is a bit tricky for them.

So yeah, Its good only due to tax benefits and if you are making a lot more than you need or for completing 80C
 
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venkateshr said:
I think earlier there was no limit and many higher salary level guys used this route for getting 8% tax-free. But my understanding is now there is a limit to which one can earn interest before being taxed. Kindly correct me if wrong.
Click to expand...
Yup, i think its 8.65%. if interest rate is above 8.65% then income earned is taxed.
 
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Also when we say VPF is it directly tax exempted or within the limit of 150000 of 80C? Because the people who are investing via VPF must have already crossed 80C limit anyway so no tax benefit as such here
 
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jaimingandhi64 said:
Also when we say VPF is it directly tax exempted or within the limit of 150000 of 80C? Because the people who are investing via VPF must have already crossed 80C limit anyway so no tax benefit as such here
Click to expand...
Its within 80C limit. You can invest more but you wouldn't recieve any benefit other than tax exemption on interest earned.
 
VPF - It comes under 80C.
Contribution limits for PF ( mandatory + voluntary) -
till 2.5 lacs per year - All earnings are tax free.
More than 2.5 lacs per year - Earning on the amount access to 2.5 will be under tax.
E.g. 3 lacs of investment in PF ( EPF + VPF).
Earnings on 2.5 - zero tax
earnings on 50 - Taxable as per the slab. Will be deducted by employer.

Tip - If you can, ask your employer to increase the Basic and hence the Employer PF contribution on which earnings till 7.5 lacs of contribution is TAX free.
 
It_is_Naruto said:
VPF - It comes under 80C.
Contribution limits for PF ( mandatory + voluntary) -
till 2.5 lacs per year - All earnings are tax free.
More than 2.5 lacs per year - Earning on the amount access to 2.5 will be under tax.
E.g. 3 lacs of investment in PF ( EPF + VPF).
Earnings on 2.5 - zero tax
earnings on 50 - Taxable as per the slab. Will be deducted by employer.

Tip - If you can, ask your employer to increase the Basic and hence the Employer PF contribution on which earnings till 7.5 lacs of contribution is TAX free.
Click to expand...
Companies hesitate as this can result in higher grauituty . In my firm 30% of total pay is basic.

The benefit is tax free interest at highest rate. No govt debt instrument gives this rate.

Just make sure your contribution (EPF+ VPF) < 2,50,000 p.a.
 
same here as well
CREDITDATA said:
Companies hesitate as this can result in higher grauituty . In my firm 30% of total pay is basic.

The benefit is tax free interest at highest rate. No govt debt instrument gives this rate.

Just make sure your contribution (EPF+ VPF) < 2,50,000 p.a.
Click to expand...
 
CREDITDATA said:
Companies hesitate as this can result in higher grauituty . In my firm 30% of total pay is basic.

The benefit is tax free interest at highest rate. No govt debt instrument gives this rate.

Just make sure your contribution (EPF+ VPF) < 2,50,000 p.a.
Click to expand...
Yes...in my firm also it's almost similar with no option to customize. But in firms where it is with employees...it is a good idea.
 
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