Which is better Investment plan PPF or 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
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
Voluntary (Upto 100%)
Employer Contribution
Taxation on Maturity Returns
Tax Free
Tax Deduction
As per section 80 C
As per section 80 C
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)

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·        In case of a PPF account, the deposited amount cannot be withdrawn unless the account matures.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


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  2. very nice blog
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  3. Great information

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