These days, if you are thinking of investing in a place where you get more interest from fixed deposits (FD) and money is safe, then you can invest in Voluntary Provident Fund (VPF) or Public Provident Fund (PPF). In these, you will also get the benefit of tank discount. Today, we are telling you about these two schemes, so that you can invest in the right place according to your own.
8.5% interest on VPF
Only 12% of basic salary can be contributed in EPF, but there is no limit to investing in VPF. That is, if the employee increases his contribution to the provident fund by reducing his in-hand salary, then this option is called VPF. 8.5% interest is being given in VPF.
It is an extension of EPF. For this reason, only jobbers can open it. In this, 100% of basic salary and DA can be invested. The government fixes the interest rate of VPF every financial year.
You will need to contact your company’s HR or finance team and request a contribution to the VPF. VPF will be added to your EPF account as soon as it is processed. No separate VPF account is opened.
The contribution of VPF can be revised every year. However, under the VPF, there is no restriction on the employer to contribute to the EPF at the same level as the employee.
If you change the job, you can get this account transferred easily. A loan can also be taken on this. Loans can also be taken for children’s education, home loan, children’s marriage etc.
For partial withdrawal of funds from VPF account, it is necessary for the account holder to work for 5 years, otherwise tax is deducted. The entire amount of VPF can be withdrawn only on retirement.
Tax exemption of up to Rs 1.5 lakh can be availed under 80C through investment in these schemes.
However, if the contribution of EPF and VPF exceeds 2.5 lakhs in a financial year under the new rule, the earnings on the additional amount as interest will be taxed. Meaning if you have deposited 3 lakh rupees annually, then the income earned by interest on 50 thousand will be taxed at the rate of your tax slab.
PPF getting 7.1% interest
This scheme can be opened anywhere in the bank or post office. Apart from this, it can also be transferred to any bank or any post office.
PPF account can be opened from Rs 500. After this you must deposit at least 500 rupees once a year. Maximum 1.5 lakh rupees can be deposited in this account in a year.
This scheme is for 15 years, from which no money can be withdrawn. But it can be extended for 5–5 years after 15 years.
It cannot be closed before 15 years, but after 3 years, a loan can be taken against this account. If anyone wants, he can withdraw money from this account from 7th year under rules.
The government reviews the interest rates every three months. These interest rates can be more or less. At present, this account is getting 7.1% interest.
Tax exemption of up to Rs 1.5 lakh can be availed under 80C through investment in these schemes. Any person can invest in them.
Where will you invest right?
A good investment option is the one that gives you the most benefit at the lowest risk. That is why when it comes to risk, your money is completely safe in both of them. Apart from this, both of you also get a fixed return. That is why before investing anywhere, keep in mind your financial goals and how long you want to invest.
