Benefits of Voluntary Provident Fund
1. Secure Mode of Investment: VPF as is backed up by the government of India is seen as a safe investment option and, it makes it a better option rather than other investment options available. Under VPF there is surety of getting the matured value along with interest and risk is barely involved.
2. Offers Flexibility: Under VPF there is no minimum and maximum investment limit, it is on the due discretion of the employee how much he wants to invest in the VPF, this offers great flexibility in terms of investment as there is no bar on minimum investment amount.
3. Hassle-free Proceedings: Opening a VPF account is extremely simple, as the VPF is invested over and above the EPF amount and, it is linked to the EPF account already created. The employ who is willing to open a VPF account can simply approach his HR/Admin/Salary consultant and fill basic details as all the details will be already available with the HR/Admin.
4. High Rate of Return: Interest rate in VPF is similar to what employ gets in an EPF account which hovers somewhere around 8% to 8.5%, VPF offer better interest rate than saving banks account and other saving schemes available which assures the employ that he will have a sufficient corpus available with him at time of maturity.
5. Availability of Loan Against VPF: VPF account has an added advantage that when the employ is in urgent requirement of funds, he can apply for a loan against the pre deposited VPF. Some conditions are to be followed and the applicant will be made available with a loan and, in some valid case applicant can even apply for partial withdrawal.
6. Tax Benefits: Maturity proceeds received under VPF are totally exempted under the Income Tax. VPF is categorized under EEE category and the principal, interest and contribution are exempted under Income tax. However, it is to note that in case the withdrawal is made before the lock in period of 5 years no tax exemption will be available in that case. Contribution is exempted under section 80C up to a cap of 1.5 lakhs and interest is exempted till 9.5%.
7. Nominee: In case of any unfortunate event causing death of the employee, whole proceeds deposited under VPF shall be paid to the nominee who has been named in the application form.