InvestorQ : What is Voluntary Provident fund(VPF) & good to invest?
Anushri Vasa made post

What is Voluntary Provident fund(VPF) & good to invest?

AR Kadam answered.
8 months ago

Voluntary Provident Fund (VPF) is additional contribution an salaried employee can make to his statutory EPF Contribution. Employer may or may not match this additional contribution. VPF earns same interest as that of EPF and has same tax treatment as that EPF i.e. E-E-E under certain conditions. Maximum income deduction is INR 1.5Lacs u/s 80C of Income-tax.

It's good for salaried employees looking for risk free and tax free returns but at the same time doesn't look attractive in long run in reducing interest rate scenario and rising inflation. Also looks risky due to recent defaults in debt markets by IL&FS and other corporates as majority of 85-95% of the monies are invested in debt market as equity exposure is limited to 5-15% either through MF ( some pre-specified schemes) and/or direct equity ( pre-specified stocks).

Consult your financial advisor and/or goal planner before investing.