Voluntary Provident Fund in India 2026

Securing the future is the aim of every individual. This is why people invest in different retirement funds or other assets that can help them with wealth creation. This is one of the reasons why people invest in the National Pension Schemes. Along with this, salaried employees already contribute a fixed amount toward the Employee Provident Fund every month.

But do you know that you can increase the amount of your contribution to PF as well? This is what we call the Voluntary Provident Fund or VPF. It gives employees the flexibility to contribute more than the mandatory EPF limit.

But there are certain voluntary Provident Fund rules and regulations that you must know. So, read this guide to know what the Voluntary Provident Fund is and why you should invest in the same.

What is a Voluntary Provident Fund (VPF)?

The Voluntary Provident Fund (VPF) is a retirement savings option. It is available to salaried employees who are already members of the Employee Provident Fund. Under VPF, an employee can voluntarily contribute more than the mandatory EPF contribution. All this amount will be deposited in their provident fund account. 

For the calculator, you must know both your gross and net salary. The amount that is credited to your PF account from your net salary. 

The additional contribution earns the same interest rate as EPF. The amount that is saved is backed by the government. This makes it a low-risk way to build a higher retirement corpus. VPF also offers tax benefits under the Income Tax Act. This makes it suitable for long-term financial planning.

Key Features

• Voluntary contribution made by the employee toward the PF account.

• Contribution is over and above the mandatory 12% EPF contribution.

• Maximum contribution allowed is up to 100% of Basic Salary and Dearness Allowance.

• Interest is earned at the same rate as the Employee Provident Fund.

• Employer is not required to contribute to the VPF amount.

• Employee is not required to opt for VPF.

• Once opted, the VPF contribution cannot be stopped before completing 5 years.

• Best if you are planning for long-term savings and retirement funding.

Benefits of Voluntary Provident Fund (VPF)

The Voluntary Provident Fund is one of the finest ways for the salaried professionals to build a good corpus for the future. This allows them to save more and ensure that they have earnings on their savings. At the same time, VPF is a key part if you are planning for FIRE.

In addition to the same, the benefits of the same are as follows:

• Helps build a larger retirement corpus through higher monthly contributions.

• Allows you to earn assured returns on the amount invested.

• Backed by the Government of India, ensuring high safety.

• Eligible for tax deduction under Section 80C up to Rs. 1.5 lakh.

• Supports disciplined savings and guides in proper planning for the future.

• Good for low-risk appetite investors and beginners.

How to Open a VPF Account

Now that you know what VPF is, you must be thinking about how to start. Well, this is very simple. The steps that you would need to follow are below:

• Submit a request to your employer for VPF.

• Mention the percentage of additional contribution you wish to make.

• This will then be deducted from your next month's salary.

• You can contribute up to 100% of your  Basic Salary and Dearness Allowance toward VPF.

• You can check the same online.

Remember, once you start the VPF, you cannot stop it in the same financial year.

VPF Interest Rate

The Voluntary Provident Fund earns interest at the same rate as EPF. This is set by the government of India every year. As of now, the interest that is earned on the EPF is  8.25% p.a.

VPF Tax Benefits

Voluntary Provident Fund offers strong tax efficiency for salaried employees. Contributions qualify for deduction under Section 80C up to Rs. 1.5 lakh. Interest earned and maturity amount are tax-free. This is only when the withdrawal is done after 5 years.

VPF Tax Exemption Status

VPF follows the EEE structure, meaning contribution, interest, and maturity are exempt from tax. However, this exemption applies only if the amount is withdrawn after completing the mandatory five-year lock-in period.

VPF Contribution Limit

There is no fixed minimum or maximum annual limit for VPF contributions. Employees can contribute up to 100% of their Basic Salary and Dearness Allowance. Employers are not required to contribute to the VPF portion.

VPF Withdrawal Rules

VPF allows partial or full withdrawals based on specific conditions. Early withdrawal before five years attracts tax. The amount is paid to the employee in case of retirement or resignation. But in case of death, the amount is paid to the nominee of the employee.

VPF Lock-in Period

The Voluntary Provident Fund has a mandatory lock-in period of 5 years. If you make a withdrawal before this period, then the amount that you withdraw will be taxable as per the TDS rules.

Steps to Check VPF Balance

If you are thinking about how to check the VPF, then the process is really simple. The steps below can help you determine the status of your VPF easily.

• Visit the official EPFO website.

• Go to the Our Services section and select For Employees.

• Click on Member Passbook and log in using your UAN and password.

• Select the relevant Member ID to view your VPF balance details.

Tips on How You Should Plan EPF for Retirement

EPF should form the base of your retirement planning, but it should not be the only component. A balanced approach helps manage risk and improve long-term returns.

• Use EPF and VPF as the stable portion of your retirement savings.

• Add mutual funds to beat inflation over the long term.

• Include NPS or UPS for additional tax benefits and structured retirement income.

• Invest in fixed deposits, debt funds, and others for liquidity.

• Review and rebalance your retirement portfolio every year.

Conclusion

The Voluntary Provident Fund is a reliable option for salaried employees. This is one of the finest ways for the salaried people to save more with no risk.

So, if you are planning your retirement, it is wise to start your financial planning wisely. Open your demat and trading account with Rupeezy and start your savings journey. Invest in multiple assets based on detailed analysis to ensure you save more. 

FAQs

What is the main difference between EPF and VPF?

EPF is a mandatory contribution. But the VPF is a voluntary contribution made by the employee. It is over and above the EPF limit.

Who can invest in a Voluntary Provident Fund?

Only salaried employees who are already members of the Employee Provident Fund can invest in VPF.

Is VPF better than other fixed-income investments?

VPF is suitable for risk-averse investors. This is mainly because it offers government-backed safety and stable returns. This is not one of the market-linked options.

Can I change my VPF contribution amount anytime?

Once selected, the VPF contribution amount cannot be changed or stopped during the same financial year.

Is VPF suitable for short-term goals?

VPF is better suited for long-term retirement planning due to its five-year lock-in period and tax structure.