What is VPF?
Voluntary Provident Fund (VPF) is the voluntary extension of the mandatory EPF. Any salaried employee with an EPF account can instruct their employer to deduct an additional percentage of basic+DA over and above the mandatory 12%. The extra amount earns the same EPFO-declared interest rate (8.25% for FY 2024-25) and is held in the same EPF account.
Why consider VPF?
VPF is one of the highest-yielding risk-free instruments available to salaried employees:
- 8.25% guaranteed — backed by EPFO/Government of India
- EEE tax treatment — contribution, interest, and maturity all exempt (within thresholds)
- No lock-in risk beyond the normal EPF rules — same withdrawal provisions apply
- No investment management — no NAV fluctuation, no fund manager risk
The trade-off: lower liquidity than a debt mutual fund or bank FD, and the ₹2.5L/FY contribution threshold for interest tax-exemption applies to the combined EPF + VPF contribution.
How to start VPF
- Submit a written request to your HR/payroll team, specifying the additional % you wish to contribute
- Declare it in your annual investment declaration form
- The deduction starts from the next payroll cycle
- The amount reflects in your EPF passbook under the same UAN
Bridges
- EPF Calculator — mandatory 12% EPF projection
- PF Calculator — colloquial PF framing of EPF
- PPF Calculator — voluntary alternative open to non-salaried
- §80C Calculator — EPF+VPF as §80C deduction input