Yes! An individual can have both the PPF and EPF accounts simultaneously. PPF – Public Provident Fund or PPF is a secured long-term investment option which is totally tax-free. PPF account can be opened in any bank or post office.
Can I have both VPF and PPF?
Only salaried individuals can sign up for VPF whereas PPF is for both salaried and non salaried individuals. An employee who wants to increase his retirement savings can tell the employer to deduct a certain percentage above the necessary 12% of basic pay and dearness allowance that goes towards EPF account.
Should I invest in VPF or PPF?
Listed below are the key difference between both accounts: A VPF account is only meant for salaried employees while a PPF account can be opened by self –employed and people working at unorganized sectors.
Difference between PPF & VPF.
|Maximum Loan||50% after 6 years||Partial withdrawals is permitted|
Can I open both PPF and EPF?
Only employees of companies registered under the EPF Act can invest in the EPF or PF. Both the employer and employee are required to contribute 12% of the employee’s basic salary and dearness allowance every month to the EPF account. … You can open a PPF account with the post office or most major banks.
Can I contribute more than 1.5 lakh in VPF?
Thus, individuals working in the private sector can contribute a maximum of Rs 2.5 lakh in a financial year in EPF and VPF to avail tax-exempt interest as announced in the Budget 2021 effective from April 1, 2021.
What is the lock in period for VPF?
Comparison of VPF With PPF
|Parameter||Voluntary Provident Fund|
|Lock-in period||Locked-in until the employee retires or is meeting a certain condition to make a premature withdrawal|
|Who is contributing?||Employee alone (employer’s contribution is restricted to the minimum requirement)|
|Extension beyond maturity||Not possible|
Can VPF be withdrawn anytime?
You cannot discontinue or withdraw out of a VPF scheme in the middle of the year. VPF scheme can be availed only by salaried professionals enrolled with the EPF. If the direct tax code comes into effect, the entire maturity amount becomes taxable.
Is VPF better than FD?
FDs can be an additional investment for individuals above their investments in EPF or VPF. For non-salaried individuals, an FD is the best form of investment as they are not eligible to invest in EPF and VPF.
Is VPF better than NPS?
All these factors make pension plans from insurance companies unattractive. And this is why the national pension scheme (NPS) is the best substitute to VPF. You have a choice of various options like corporate bonds, government bonds or stocks and you can decide the percentage allocation to various asset classes.
Can I deposit more than 1.5 lakh in EPF?
While the maximum investment limit is Rs 1.5 lakh in a financial year, a minimum annual investment of Rs 500 is necessary to keep a PPF account active.
Is PF better than PPF?
EPF is a retirement benefit plan specifically for salaried individuals. Both the employer and employee will contribute to this scheme.
EPF vs PPF.
|Interest Rate||8.5 %||7.1 %|
|Who can Invest||Only Salaried Employee||Anybody can invest in PPF|
|Minimum Investment||24% of Basic Salary||Rs. 500|
Which bank has highest PPF interest rate?
Interest payable on PPF is fixed quarterly by Ministry of Finance, Government of India from April 1st, 2016. Banks offer PPF accounts at the rate fixed by Indian Government. Current PPF interest rates offered by SBI, ICICI and all banks is 7.10% as applicable from 1st Jul 2021.
How much can we invest in VPF per year?
The taxpayers can deduct up to Rs 1,50,000 a year by investing in VPF. The interest earned on VPF is tax-free and withdrawals made after a period of five years are also made tax-exempt. Partial or full withdrawals made within five years are taxable.
How VPF is calculated?
To calculate the monthly rate of interest of VPF, it is divided by 1200 and then multiplied by a month’s opening balance. Example: Ranjan joined Company XYZ for a salary of Rs. 30,000 on 1st April 2020. As per the EPFO mandate, his contribution to his EPF account is 12% of his salary.
Is it a good idea to invest in VPF?
Interest rates are at a historic low, which has resulted in many long-term debt investment instruments offering low rates. However, in FY21, the Employees’ Provident Fund (EPF) earned an interest rate of 8.5%.