If you are one of those getting nervous while planning their retirement? Then the below guide is meant for you as it meets the aspect of securing your financial future. Moreover, in countries like India, you must have heard about PPF vs EPF vs VPF as provident funds. These present funding options attract options for long-term savings goals. But, in case you don’t know, then, initially, these Employee Provident Funds (EPF), Voluntary Provident Funds (VPF), and Public Provident Funds (PPF) are basically government-backed retirement plans.
Furthermore, opting for any PPF vs EPF vs VPF account online can be a prominent choice for resolving different financial goals and situations. Additionally, it would help if you visited the official freeemicalculator.in the site EMI calculator to consider the distinct features, tax treatment, withdrawal, and accurate calculation of your VPF account via the VPF calculator. So without waiting anymore, let’s head towards these guidelines that help you make a well-informed decision while investing in your retirement.
Difference Between EPF, PPF, and VPF Accounts
Wait is over because here you have a comprehensive comparison of the three major Indian government-backed retirement plans: PPF vs EPF vs VPF. And don’t worry, as here you can even get enough prescribed information on lesser-known VPF accounts online as well. Moreover, to get information about the VPF calculator and how to use it, visit the EMI Calculator now. So let’s get started.
Employee Provident Fund (EPF):
- Eligibility: Firstly, it’s mandatory for employees working in organizations registered under the EPFO.
- Contribution: The employee and the employer must contribute to the EPF account, totaling 24% of the employee’s basic salary and dearness allowance.
- Tax Benefits: EPF contributions are eligible for tax deductions according to Section 80C of the Income Tax Act.
- Interest Rate: The EPF offers a fixed and tax-free interest rate, which the government declares yearly.
- Withdrawal: EPF offers partial and complete withdrawal options, subject to certain conditions, such as unemployment for two months.
- Pros: Guaranteed rate of return, risk-free, and both the employee and employer contribute.
- Cons: The contribution amount is fixed and mandatory for salaried individuals.
Public Provident Fund (PPF):
- Eligibility: Firstly, the PPF scheme is open to all the citizens of India.
- Contribution: Contributions to PPF are voluntary, with minimum and maximum annual deposit limits set by the government.
- Tax Benefits: Per section 80C of the Income Tax Act, PPF contributions are eligible for tax deductions.
- Interest Rate: PPF offers a higher interest rate compared to EPF, currently at 7.1% per annum, compounded annually.
- Withdrawal: PPF has a lock-in period of 15 years, with partial withdrawals allowed from the 7th financial year onward.
- Pros: Higher interest rate, flexibility for partial withdrawals, open to all individuals.
- Cons: Long lock-in period, limited withdrawal options, no employer contribution. Furthermore, you can even access an EMI calculator to get clarity on PPF vs EPF vs VPF account online.
Voluntary Provident Fund (VPF):
- Eligibility: Firstly, only available to salaried individuals. Moreover, to access easy VPF account calculation, visit the VPF calculator at EMI calculator.
- Contribution: VPF is an extension of EPF, allowing employees to voluntarily contribute more than the mandatory 12% of their basic salary.
- Tax Benefits: VPF contributions receive the same tax benefits as EPF under Section 80C of the Income Tax Act.
- Interest Rate: VPF offers the same interest rate as EPF, currently at 8.15% per annum. Furthermore, to calculate this interest rate, access the VPF calculator today.
- Withdrawal: VPF allows for complete withdrawal, but only after completion of 5 years. And consequently, it becomes taxable if withdrawn before the lock-in period.
- Pros: In the PPF vs EPF vs VPF account online scheme race. It has a higher contribution amount and the same tax benefits as EPF.
- Cons: Only available to salaried individuals, no employer contribution.
How to Choose the Right Provident Fund Scheme?
- If you are a salaried individual looking for a retirement-focused, risk-free investment with mandatory contributions, EPF is a suitable option.
- If you want to increase your retirement savings beyond the mandated EPF contribution and receive the same tax benefits, you can opt for VPF.
- For individuals seeking long-term savings with higher interest rates, flexibility for partial withdrawals, and open to all individuals, PPF Calculator is a good choice.
Undeniably, choosing the best provident fund scheme majorly depends upon some factors. And these are individual risk appetite, financial goals, and eligibility. Moreover, it’s equally important to consider each scheme’s pros & cons before making an informed decision. Remember, even if you have a VPF account or any other scheme, it should perfectly blend with your unique circumstances. At the same time, consulting financial experts or advisors to make well-informed investment decisions is unskippable.