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Why Provident Fund is the perfect fund? Here understand the complete ABCD of EPF, how VPF also does wonders

Employees Provident Fund: Often employed people walk out of their PF. But, this is such a money, which is always a loss when it comes to withdrawal. Therefore it is necessary to understand it.




Employees Provident Fund- Employee Provident Fund (EPF) is a compulsory retirement savings scheme, which is managed by Employees’ Provident Fund Organization (EPFO). The employee does not have to go anywhere to open it. When he works in a company for the first time, then the PF account is opened on behalf of that company itself. In this, the company deducts 12 percent of the basic salary of the employee every month and deposits it and himself also puts a maximum of 12 percent in the PF account of that employee. Interest is paid annually on this entire money.Also Read:IRCTC offers cashback discount in fares for woman passengers on rakshabandhan, see details

Get the benefit of pension

The amount deposited in the Provident Fund account is divided into three parts. First the company that deducts (12%) from your basic salary and deposits it. Second, the company also deposits the same amount i.e. 12% in your PF account on its behalf. The amount deposited by the company is divided into two parts. Out of 12%, 3.67% is deposited in PF contribution and 8.33% in pension fund. After your retirement, pension starts for you from the pension fund. How much will be the amount of pension, it depends on the amount deposited in your PF account.Also Read: ITR Filing: Income tax is not worth earning, yet tax return should be filed, many benefits are available

Option of VPF also in EPF

Most of the people invest some part of their earnings in small savings schemes for investment. The government pays interest on these schemes. At present, PF is getting more interest than all such schemes. If you are employed, then you can deposit some part of your earnings in the PF account as well as in the Voluntary Provident Fund. The same interest is available on VPF as well as PF.Also Read:PNB home loan offer zero processing fee documentation charges know the details

How to take advantage of VPF

  • Just as some part of your basic salary goes to your Provident Fund account, you can also deposit some more part of your salary in Voluntary Provident Fund (VPF) as per your wish.
  • VPF account is a risk free and high return option on retirement.
  • To open a VPF account, you will have to request the HR or Finance department of your company.
  • There is no contribution of the company in the VPF account. You will get annual interest on the amount you deposit from your salary in this account. The same interest is earned on the deposited amount as PF. At present, the annual interest on this is 8.65%.
  • Tax exemption is available under section 80C on deposits up to Rs 1.50 lakh per annum.
  • The interest earned on the amount deposited in this is completely tax-free.
  • On changing jobs, it can be easily transferred like PF account. However, for this, your Universal Account Number (UAN) should be linked to your Aadhaar. You can contact the HR of your company for UAN.

How much money is deposited?

After withdrawing 12% of the basic salary in PF, you get the remaining 88% of the basic salary monthly along with other allowances. If you want, you can deposit the remaining 88% of basic salary and up to 100% of dearness allowance in this VPF account. Usually, twice a year, you can get changes in the amount deposited in VPF. That is, you can get more or less the amount deposited in VPF. However, for this you will have to contact the HR / Finance Department of your company itself.Also Read: CM Yogi Adityanath gave a wonderful gift to women on Rakshabandhan, will travel for free

Money can be withdrawn in these situations

VPF account is an investment option, in which after your retirement, you get lump sum money with interest. However, in some circumstances, VPF money can be withdrawn only according to the rules of PF after leaving the job and even during the job. The rules are as follows:

On job loss:

If you have lost your job and are unemployed for a month, then you can withdraw 75% of the amount from your VPF account. The remaining 25% can be withdrawn after two months of job loss. If you have contributed VPF less than 5 years, then you will have to pay tax on the amount withdrawn.

For marriage:

If you want to withdraw money from VPF for your child, brother / sister or your marriage, then you can withdraw 50 percent of the amount. However, for this it is necessary that you have completed 7 years while doing the job. That is, money is being deposited in the VPF account for 7 years.Also Read: With Whatsapp, you will be able to send thousands of rupees in minutes, know how to use the feature

Higher Education:

You can also withdraw 50 percent of the amount with interest from the VPF account for the higher education of you or your child. For this also, it is necessary to have completed at least 7 years while working. However, documents related to higher education have to be presented.




Medical Emergency:

If you want money for the treatment of yourself, life partner, children or parents, then you can withdraw 6 times your basic salary or the full amount of VPF (whichever is less). It doesn’t matter how old the job is.

To buy a house:

If you want to buy or build a house, then up to 36 times your basic salary and if you want to buy land, then up to 24 times the basic salary can be withdrawn from the VPF account. But for this it is necessary that you should have completed at least 5 years while doing the job.

Parvesh Maurya
Parvesh Maurya
Parvesh Maurya, has 5 years of experience in writing Finance Content, Entertainment news, Cricket and more. He has done BA in English. He loves to Play Sports and read books in free time. In case of any complain or feedback, please contact me @ praveshmaurya24@gmail.com
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