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Voluntary Provident Fund (VPF): Interest Rate, Enrollment, Eligibility, Withdrawal

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November 17, 2023


What’s Inside

Most financial experts believe it's never too early to start retirement planning. Thankfully, India has different government-backed low-risk retirement plans and schemes, including compulsory and optional provident funds. While EPF is a compulsory scheme for eligible employees, VPF is an optional one. 

What is VPF?

Unlike EPF or Employee’s Provident Fund, where salaried employees working in eligible organisations contribute at least 12% of their basic salary to a retirement fund and their employers contribute a matching amount, VPF is different. 

The VPF full form is Voluntary Provident Fund. While an extension of the EPF scheme, VPF includes only voluntary contributions from the employee. In other words, employees can voluntarily deposit extra funds over and above their mandatory EPF limits into their VPF account. 

VPF Eligibility Criteria

To enrol for VPF, you must meet the following eligibility criteria:

  • You should be a salaried employee in an organisation covered under the EPF scheme.
  • You should have an active EPF account.
  • You should be employed in the organised sector.

VPF Interest Rate

Much like EPF, VPF interest rates are also determined and notified by the Indian government. As of 2022-23, the VPF interest rate is 8.15% p.a. You can use a VPF calculator to estimate returns for the current fiscal year. 

Here’s an overview of VPF interest rates over the last five years: 

Financial Year

Interest Rate











How to Enroll for VPF?

Enrolling for VPF is pretty straightforward. Here’s a step-by-step guide to help you:

1. Contact the HR department

Submit a written request to your company’s HR team, notifying them of your VPF request. 

2. Fill up the VPF application form

Next, fill out the VPF application form with your personal details. 

3. Decide on your VPF contribution

Outline the amount you wish to contribute each month towards VPF. This amount will be deducted from your monthly basic salary and dearness allowance. 

You can enrol for VPF at any time of the financial year. However, you cannot discontinue VPF contributions during an ongoing financial year. Also, your VPF contribution cannot exceed 100% of your basic salary and dearness allowance limits. 

VPF Withdrawal Rules

VPF allows for whole/partial withdrawals of funds after the 5-year lock-in period, post submission of Form 31 to the employer. During this lock-in period, you can also make partial/complete withdrawals from the VPF account. However, doing so will attract taxes on the withdrawn sum. 

Moreover, this liquidity benefit is applicable only under the following circumstances:

  • Payment of home loans or any other loan
  • Funding your children’s education or marriage
  • Financing a medical emergency
  • Buying a new house/land or constructing a new house

Wrapping It Up

VPF is a low-risk investment avenue, perfect for salaried investors looking to grow their corpus over time while hedging risks and tax liabilities. VPF is best suited for those approaching retirement age since it offers fixed interest accruals and stable returns for the approaching golden years. For a well-balanced retirement portfolio, you can estimate your returns using a VPF calculator and restructure your investments accordingly. 

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Frequently Asked Questions

1. What is the current interest rate offered by the Voluntary Provident Fund (VPF), and how does it compare to other savings or investment options?

The current rate of interest for VPF (2023-24) stands at 8.15% p.a., which is higher than other fixed-income generating investment avenues like PPF and fixed deposits.

2. Who is eligible to enrol in the Voluntary Provident Fund (VPF), and are there any specific requirements or restrictions for participation?

Only salaried employees already enrolled in the EPF scheme can opt for VPF. People employed in the unorganised sector cannot opt for VPF. 

3. What is the process for enrolling in the VPF, and how does it differ from the mandatory Employee Provident Fund (EPF)?

For VPF, the employee has to convey a desire to the company’s HR for additional contributions over and above their EPF contribution. 

4. Can you explain the rules and procedures for withdrawal from the VPF, and are there any conditions or tax implications associated with withdrawals?

VPF comes with a 5-year lock-in window. If you withdraw (whole/partial) funds before the end of this period, the amount will be subject to taxes as per VPF rules. Moreover, you can only withdraw funds under certain circumstances, like loan payments or medical expenses. 

5. How does the VPF contribute to an individual's retirement savings and financial planning, and what are the potential benefits of choosing this option over other retirement savings plans?

As a government-backed scheme, VPF adds safety to your retirement savings and financial planning. This low-risk investment option brings you competitive returns, tax benefits, and the freedom to decide on your contribution limits.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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