Voluntary Provident Fund (VPF) – Features, Benefits, Interest Rate & Withdrawal Rules

Indialends, 11 Sep 2025

Voluntary Provident Fund (VPF): A Smart Way to Boost Your Retirement Savings

What’s Inside This Blog?

What is Voluntary Provident Fund? Key Features of VPF Benefits of Voluntary Provident Fund How to Apply for VPF Withdrawal Rules for VPF VPF vs PPF: What’s the Difference? IndiaLends Tip

Voluntary Provident Fund (VPF): A Smart Way to Boost Your Retirement Savings

The Voluntary Provident Fund (VPF) is an extension of the Employees’ Provident Fund (EPF) that allows salaried employees to contribute more than the mandatory 12% of their basic salary towards their provident fund account. This extra contribution earns the same interest rate as EPF and comes with attractive tax benefits.

For employees looking to build a larger retirement corpus with minimal risk, the VPF is one of the most secure investment options in India.

What is Voluntary Provident Fund?

The VPF is a voluntary savings scheme where employees can contribute up to 100% of their basic salary plus Dearness Allowance (DA) over and above the mandatory EPF contribution.

Employer contribution: No contribution from the employer.
Interest rate: Same as EPF (as declared annually by the government).
Lock-in period: Until retirement or resignation.

Key Features of VPF

Feature	Details
Eligibility	Only salaried employees who are EPF members
Contribution Limit	Up to 100% of basic salary + DA
Interest Rate	Same as EPF (e.g., 8.25% for FY 2024–25)
Tax Benefits	Contribution up to ₹1.5 lakh per year under Section 80C; Interest exempt from tax (subject to limits)
Risk Level	Very low — backed by the Government of India
Tenure	Till retirement or withdrawal under EPF rules

Benefits of Voluntary Provident Fund

1. Higher Retirement Corpus – Boost your savings with compound interest.

2. Tax Savings – Claim deductions under Section 80C and enjoy tax-free returns (within the ₹2.5 lakh annual PF contribution limit).

3. Safe Investment – Risk-free, as it’s backed by the government.

4. Same Interest as EPF – No compromise on returns despite higher contributions.

How to Apply for VPF

You can start VPF contributions by simply requesting your employer to deduct an additional amount from your salary every month. This extra amount will be deposited into your EPF account under the VPF head.

Withdrawal Rules for VPF

Withdrawal is allowed only:

At retirement
Upon resignation from service
Under special EPF withdrawal provisions (marriage, education, medical emergencies, home purchase) using relevant EPF forms

For withdrawal process, refer: EPF Form 31 – Partial Withdrawal Guide.

VPF vs PPF: What’s the Difference?

Parameter	VPF	PPF
Eligibility	Only salaried employees	Any Indian citizen
Interest Rate	Same as EPF	Declared quarterly by the government
Lock-in Period	Till retirement or resignation	15 years
Employer Contribution	None	None
Tax Benefits	80C + Tax-free interest	80C + Tax-free interest

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