Updating the vpf and vpis
VPFs also enjoy Section 80C tax benefits and the interest earned is tax-free.But bear in mind that VPFs are long-term investments and governed by the same set of rules that are applicable to provident funds.VPF offers a higher rate of interest (8.65 per cent) and the contributions are eligible for tax exemption up to Rs 1.5 lakh under Section 80C of the Income Tax Act. Members of the Employees' Provident Fund Organisation (EPFO) invest 12 per cent of their salary (basic plus dearness allowance) towards provident fund, with a matching contribution from the employer.
Investment limit: There is no limit on VPF contributions. PPF allows a maximum investment of Rs 1.5 lakh per account per year.Interest rate: The interest rate for PPF is declared every quarter and is linked to yields from government securities of similar maturity, along with a mark-up of 0.25 percentage point.The interest rate for VPF/EPF is declared by EPFO at the end of the year.In organisations with more than 20 employees, every month an amount of 12 % of the salary is deducted towards contributions for the Employee Provident Fund (EPF).An equal and matching contribution has to be made by the employer each month.