PM Modi has implemented Lockdown 2 in India smoothly. The same, now the central government has recently reduced the interest rate on small savings schemes. Due to this, the scheme Public Provident Fund (PPF), which is very popular among the salaried people, is now getting 7.1 percent interest as compared to the earlier 7.9 percent. This has caused a big setback to the investing public with a desire for guaranteed and tax free returns. In such a situation, some financial planners are advising to invest in Voluntary Retirement Fund (VPF). It is noteworthy that every month 12 percent of the salary of salaried employees is deposited in the Employees Provident Fund. At the same time, the employer also deposits 12 percent of the basic salary of every employee in the EPF. If employees invest more than 12 percent of their salary in PF fund, then it is called VPF. Interest on VPF is also available at the same rate as on PF.
For your information, let us tell you that before answering this question, let us know what kind of benefits you get on investing in VPF. Investment and tax expert Balwant Jain says, "Contribution made in VPF is exempt under Section 80C of the Income Tax Act. Like EPF, VPF also has the benefit of EEE (Exem, Exemt, Exemt). This means that if you deposit an amount of 1.5 lakh rupees in VPF in a year, then it gives the benefit of interest rebate on the interest earned and the amount received on maturity.
If you do not know, then tell that the rate of interest received on EPF changes every year. In the financial year 2019-20, the EPF paid interest at the rate of 8.5%. However, it is not yet approved by the government. It is noteworthy that VPF has a lock-in period of five years. Prior to that withdrawal you have to pay tax on the interest earned on VPF. However, you can remove non-refundable advances in some cases.
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