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

VPF
Invest­ment qual­i­fies under Sec­tion 80C under the Rs 1, 00, 000 limit.

PPF
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.

Share This Post
Digg This
Reddit This
Stumble Now!
Buzz This
Vote on DZone
Share on Facebook
Bookmark this on Delicious
Kick It on DotNetKicks.com
Shout it
Share on LinkedIn
Bookmark this on Technorati
Post on Twitter
Google Buzz (aka. Google Reader)

Related posts:

  1. EPF vs PPF – Which is a bet­ter option
  2. Employee Prov­i­dent Fund (EPF)
  3. Vol­un­tary Prov­i­dent Fund (VPF)
  4. EPF at 9.5% — Should I invest
  5. EPF rate increased from 8.5% to 9.5%

You must be logged in to post a comment.

[contact-form 2 "Form1"]