While Public Provident Fund (PPF) and 5-year Expense Saver Fixed deposit plans are extremely famous among salaried people for guaranteeing tax derivations under Segment 80C of the Income tax Act, there is a third choice that is superior to these two. Known as VPF (Voluntary Provident Fund), the plan offers preferred loan costs over PPF and FD.
Is VPF like EPF?
Salaried workers are qualified for required Employees Provident Fund (EPF) benefits. Nonetheless, VPF is not quite the same as EPF. VPF, as the name proposes, is an intentional commitment office accessible to salaried representatives.
VPF versus PPF
The ongoing pace of interest under PPF is 7.1% with a 15-year obligatory lock-in. In VPN, the lock-in period is only 5 years and the ongoing interest rate is 8.1%.
Premium procured from PPF deposits is tax-exempt, while on account of VPF, premium on consolidated deposits (VPF+EPF) up to Rs 2.5 lakh is tax-exempt.
Crisis withdrawal from VPF is permitted whenever. Nonetheless, on account of PPF, you can make a crisis withdrawal solely after 5 years.
VPF versus Tax saver FD
The interest rate presented on tax saver FDs by most banks is around 6% with a required lock-in of 5 years. VPF is offering a lot higher interest rate. VPF interest is additionally higher than plans like National Savings Certificate (NSC).
The premium procured from tax saver FD is available according to the tax slab of the investors. No crisis withdrawal is permitted from tax saver FD.
What you ought to remember?
While VPF seems a vastly improved tax saving venture instrument than PPF or 5-year FD, you ought to remember that premium procured above consolidated commitment from EPF + VPF above Rs 2.5 lakh is available. In this way, you can lean toward VPF over PPF and FD assuming that your yearly commitment would be not as much as Rs 2.5 lakh. You can add to VPF by keeping in touch with the HR agent in your organization.
