VPF vs PPF – Who’s better October 23rd, 2010 Posted in Provident Fund
VPF vs PPF – Which is better? Many of us have this question and want to know which is better as an investment option, VPF (Voluntary Provident Fund) or Public Provident Fund. As the name suggests both the products – VPF and PPF are provident fund schemes. Let’s understand the two schemes in detail –
What is Voluntary Provident Fund (VPF)
Voluntary Provident Fund – What is this?
Note – Only Salaried employees have the option of Voluntary Provident Fund.
What is Public Provident Fund (PPF)
VPF vs PPF – Interest Rate
Interest Rate on Voluntary Provident Fund (VPF) is same as EPF interest rate.
VPF: 8.5% per annum (For the year 2010 –2011, you can expect a return of 9.5% per annum)
PPF: 8% per annum
VPF vs PPF – Investment period
VPF – Amount is paid at the time of retirement or resignation. Or, it can be transferred from one company to the other if one changes jobs. On death, the accumulated balance is paid to the legal heir.
PPF –Amount can be withdrawn on maturity, that is, after 15 years of the close of the financial year
VPF vs PPF – Impact of Tax
Investment qualifies under Section 80C under the Rs 1, 00, 000 limit.
Investment qualifies under Section 80C under the Rs 1, 00, 000 limit. On maturity, you pay absolutely no tax.
VPF or PPF — Which is better?
To sum up, major difference between VPF and PPF is the rate of return.Rate of interest on VPF is also higher (currently 8.50%) than interest on PPF (8%).
If you are salaried and have to decide between the two, VPF is better than PPF.
- EPF vs PPF – Which is a better option
- Employee Provident Fund (EPF)
- Voluntary Provident Fund (VPF)
- EPF at 9.5% — Should I invest
- EPF rate increased from 8.5% to 9.5%