Yes, your contributions to the Voluntary Provident Fund (VPF) are eligible for tax exemptions as applicable by Section 80C of the Income Tax Act, 1961. These deductions are reduced from your total taxable income and this helps you in tax saving.
The answer you’ve been waiting for is here now. a list of pertinent questions and answers that you might occasionally need.
Is vpf part of 80c? – All helpful answers
Can I invest more than 1.5 lakhs in VPF?For PPF, the entire return earned is exempted from income tax, however, one can not invest more than Rs 1.5 lakh each year. Budget 2021 has a proposal to limit the exemption on return earned on VPF
Is VPF exempted?The annual EPF contribution is Rs 43,200 (Rs 3600 X 12). The maximum amount that you can invest via VPF will be Rs 2,06,800 (Rs 2.5 lakh less of Rs 43,200) in a financial year. This is the maximum amount you can invest while ensuring that interest earned from it remains tax-exempt in your hands
How do I deduct VPF?According to Section 80C of the Income Tax Act 1961, you can enjoy a VPF tax exemption on the interest earned from this scheme. Eligible employees qualify for an annual tax deduction of up to ?1,50,000. Accordingly, experts suggest that your annual savings on taxes will be equal to ?46,800
Is interest earned on VPF taxable?Effective from April 1, 2021, if an employee’s own contribution to EPF and VPF exceeds Rs 2.5 lakh in a financial year, then the interest earned on excess contribution will be taxable in the hands of an individual
How much amount of VPF is tax free?The annual EPF contribution is Rs 43,200 (Rs 3600 X 12). The maximum amount that you can invest via VPF will be Rs 2,06,800 (Rs 2.5 lakh less of Rs 43,200) in a financial year. This is the maximum amount you can invest while ensuring that interest earned from it remains tax-exempt in your hands.
Which is better PPF or VPF?The decision to choose between PPF and VPF depends on the individual’s investment horizon and return expectations. At present, the rate of return for VPF is 8.5 percent, while it is 7.1 percent for PPF. As VPF has a higher interest rate, contributing to this scheme can build a sizeable retirement fund at a faster rate.
Can I invest in both PPF and VPF?One word of caution. You should put your money in both these schemes keeping long term horizon in mind as you can not withdraw your investments in these products as easily as is the case with other debt products like debt schemes of mutual funds and bank fixed deposits.
Can I withdraw VPF after 5 years?As per Voluntary Provident Fund withdrawal rules, contribution to a VPF account is subject to a maturity period of 5 years. Therefore, an individual cannot withdraw any sum from their Voluntary Provident Fund before the completion of 5 years sans repercussions.
Is investing in VPF a good idea?The investment earns a fixed interest each year, as declared by the government. The contributions are also eligible for deduction under Section 80C of the Income Tax Act, up to a maximum of Rs 1.5 lakh each year. These are the advantages of the VPF.
Which is better VPF or FD?FDs offer more convenience and flexibility in terms of the investment amount and individuals can customise it to suit their financial needs, with the higher interest rate helping their money grow faster when compared to EPF or VPF.
Can I change VPF contribution every year?It is possible to change the VPF from the old company to the new one. Since the account is linked to an individual’s Aadhaar card, the process is very simple. Are there any eligibility criteria to open a VPF account? Any individual who is a part of an organisation’s payroll can open a VPF account.
Explore Is vpf part of 80c? with tags: VPF vs PPF, VPF vs NPS, VPF tax exemption under which Section, VPF tax rules 2022, Is VPF taxable, VPF benefits, VPF contribution limit, VPF Tax Calculator
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