Any Indian can invest in PPF. At the same time, only salaried employees who have an Employee Provident Fund (EPF) account and regularly contribute to EPF can invest money in VPF.
Tax saving season is going on. There is only time till March 31 to avail income tax exemption in the financial year 2023-24. In such a situation, if you are preparing to invest, then where would it be right to invest in Public Provident Fund (PPF) or Voluntary Provident Fund (VPF)? Let us tell you that at present the interest on PPF is 7.1% and on VPF the interest is 8.25%. Let us know where it would be better to invest in these two.
Who can invest in PPF and VPF?
Any Indian can invest in PPF. At the same time, only salaried employees who have an Employee Provident Fund (EPF) account and regularly contribute to EPF can invest money in VPF. It is nothing but an extension of your EPF account. Since it is voluntary, the contribution for VPF will be higher than the 12% mandatory contribution for EPF. It is important to note that VPF is exclusively available to salaried individuals, whereas PPF offers to both salaried and self-employed individuals.
How much can one invest in PPF and VPF?
You can open a PPF account with just Rs 100. Keep in mind that you have to deposit a minimum of Rs 500 in a financial year. You can invest a maximum of Rs 1,50,000 in PPF in a financial year. There is no minimum amount or minimum annual investment for VPF. You can contribute up to 100% of your basic salary by combining EPF and VPF.
PF or VPF: Where to invest?
According to tax experts, your choice between VPF and PPF will depend on factors such as eligibility, personal preferences and long-term financial goals. If you are saving for retirement, then VPF can be a better option because currently the interest rate on VPF is 8.15% and on PPF it is 7.1%. That means VPF is getting 1% more interest than PPF. A great option to invest for retirement.
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