Don’t put cash in the bank, VPF is the best way to get the highest interest rate for salaried employees


VPF is the best investment option for salaried employees who want to save a large amount for retirement in addition to the Employees Provident Fund (EPF) in the event of a sharp fall in interest rates on small savings schemes. The Public Provident Fund (PPF), one of the most popular long-term savings options among Indians, now earns 7.1 per cent. But in this case you can make more profit by investing in Voluntary Provident Fund (VPF).

VPF investment

Employees can contribute up to 12% to their provident fund account. In addition, VPF is a voluntary donation. Contributions to VPF receive the same interest rate as EPF contributions. A salaried employee can invest 100% of his basic salary or DA in VPF. Contributions to VPF are eligible for tax deduction under Section 80C. Like the EPF, the VPF receives EEE (Exempt-Exempt-Exempt) status. That is, investments up to Rs 1.5 lakh a year will be exempt from tax.

Also Read: Check These Conditions Before Filing ITR-1 (Sahaj)

interest rate

The VPF interest rate changes every year. During the last financial year (FY2019-20), EPF announced a rate of 8.5 per cent on deposits. Contributions to the VPF have a lock-in period of five years. If you withdraw before that, you must pay tax on the interest earned through the VPF contribution.


Advances can be obtained from the VPF balance for needs such as buying a home, repaying a home loan, medical needs, education or child marriage. The advance amount will depend on the employee’s need, number of years of service, etc.

Do you invest in VPF?

Individuals who are paid to collect retirement corpus should give preference to VPF over PPF and NPS as the interest rate offered by VPF is higher than PPF and the maturity amount is fully tax deductible.


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