Which is better Investment plan PPF or VPF?
PPF V/s VPF
Planning for retirement starts with thinking about your
retirement goals and how long you have to meet them. You need to start early so
that you have enough time to save and invest. Once you have your retirement
corpus, investment/saving horizon all mapped out, it is time to choose an
investment vehicle which will help you reach your goal. Note that it is
extremely important to choose an option which will offer you inflation-beating
returns.
Even though the features of the PPF and VPF seem similar,
the biggest difference between PPF and VPF is that PPF can be availed by
self-employed persons and employees from unorganized sectors, while VPF is only
available for salaried individuals.
PPF stands for
Public Provident Fund and VPF for Voluntary Provident Fund. Both are financial
instruments offered by the Government of India to help you save for your
retirement. By investing in these schemes, you can receive assured returns on
your savings. Well, before investing in these schemes, it is important you know
how these investments schemes operate.
Difference between PPF & VPF
Features
|
PPF
|
VPF
|
Who can Invest?
|
Any Resident Indian, except NRls
|
Any Resident Employed Individual
|
Min Period of Investment
|
15 years
|
Up to retirement or resignation, whichever is earlier
|
Employee Contribution on Basic + DA
|
N.A
|
Voluntary (Upto 100%)
|
Employer Contribution
|
N.A
|
N.A
|
Taxation on Maturity Returns
|
None
|
Tax Free
|
Tax Deduction
|
As per section 80 C
|
As per section 80 C
|
Maturity
|
Can be extended indefinitely by extending for 5 years each
after that.
|
Can transfer account to new company till retirement.
|
Maximum Loan
|
50% after 6 years
|
Partial withdrawals is permitted
|
Interest Rate (Present)
|
7.1%
|
8.5%
|
There
are some differences exist between a PPF account and VPF account. Listed below are
the key differences between both accounts:
·
A VPF account is only meant for
salaried employees while a PPF account can be opened by self –employed and
people working at unorganized sectors.
·
Interest offered on a VPF account is
same with an EPF account which is 8.5%. On the other
hand, a PPF account offers 7.1% on your savings.
·
Returns received from a PPF account
are free from income tax. On the other hand contributions made towards a VPF
account qualifies for tax deduction under Section 80C of the Indian Income Tax
Act, 1961.
· In case of a PPF account, the
deposited amount cannot be withdrawn unless the account matures. The maturity
period of a PPF account is 15 years. But when it comes to VPF accounts,
employees can withdraw funds as and when they need to meet their financial
requirements. However, if an employee withdraws funds from a VPF account before
the account completes 5 years, the amount will taxed.
What is PPF?
It is an
investment scheme mainly designed for the self-employed individuals and workers
of unorganized sectors to provide them with income security at old age. It is
fixed income security scheme that enables you to invest a minimum of a minimum
amount of Rs. 500 and a maximum of Rs. 1, 50,000. You can guarantee and tax
free returns by investing in a PPF account.
What is a VPF?
The Voluntary Provident Fund account is another investment option that
helps a salaried individual to save more towards their retirement, apart from
the mandatory deduction of 12% of the basic salary. Voluntary Provident Funds
can be accessed by salaried individuals only. However, employers cannot force
an employee to contribute to VPF. It is a voluntary move taken by an employee.
Where to Invest?
Both the plans are
backed by Govt. of India and have good returns. But if you are employed in any company
where you are investing EPF then rather investing in PPF invest in VPF because presently
it has much higher return.
If you are self
employed then you don’t have option rather than investing in PPF
To know more details about PPF click on below link
Public Provident Fund
very nice blog
ReplyDeleteplease visit my blog also
https://kidscricketcoaching.blogspot.com/2020/05/episode-13-drive-shot-19052020.html
very nice blog
ReplyDeleteplease visit my blog also
https://kidscricketcoaching.blogspot.com/2020/05/episode-13-drive-shot-19052020.html
Helpful
ReplyDeleteGreat information
ReplyDeleteUseful information
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteGreat blog , very impressive 👌🏻👍🏻
ReplyDeleteउपयोगी जानकारी।
ReplyDeleteUseful information in simple words
ReplyDeleteNice blog ��
ReplyDeleteVery infirmative
ReplyDeleteVery informative
ReplyDeleteVery valuable information, it's not in all the blogs that we find here, congratulations, I was looking for something like this and found it here. Investing for Retirement in your 60's
ReplyDeleteThis article content is really unique and amazing. Blog really helpful for us!
ReplyDeleteDemat account broker