Voluntary Provident Fund (VPF)

Voluntary Provident Fund (VPF) is a secure, government-backed option that allows salaried employees to invest beyond the 12% EPF limit, contributing up to 100% of their basic salary plus DA.
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Voluntary Provident Fund
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4 mins
21-Apr-2026

For many salaried individuals, retirement planning revolves around EPF, but it may not always be enough. VPF, or the VPF full form—Voluntary Provident Fund, allows employees to contribute more towards retirement savings with the same safety and tax benefits as EPF. It offers flexibility, higher savings potential, and a disciplined way to build a stronger retirement corpus over time.


What is the Voluntary Provident Fund (VPF)?

The Voluntary Provident Fund is essentially an extension of your EPF account. While the EPF mandates a 12% contribution from both employee and employer, VPF allows you to voluntarily contribute up to 100% of your basic salary + DA (Dearness Allowance).

This is a low-risk, high-discipline savings option specifically designed for salaried employees who want to strengthen their long-term financial security.

Also Read: What is Provident Fund (PF)?


 

Who can invest in voluntary provident fund?


Voluntary Provident Fund (VPF) is an extension of the Employees’ Provident Fund (EPF). Only salaried employees who are already contributing to EPF through their employer and receive a regular salary in a registered salary account are eligible to invest in VPF.


 

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Features of Voluntary Provident Fund

Tax Efficiency

VPF contributions qualify for tax deductions under Section 80C, making it a tax-efficient investment option. Additionally, interest earned and maturity proceeds are tax-free if conditions are met, helping investors maximise post-tax returns while building long-term savings in a structured and disciplined manner.

 

Safe Investment Option

VPF is backed by the Government of India, as it is an extension of EPF. This makes it a low-risk investment option with assured returns, ideal for conservative investors who prioritise capital protection along with steady growth over time.

 

Ease of Application

Opting for VPF is simple and hassle-free. Employees can start contributions through their employer without opening a separate account. Since it is linked to EPF, the process is seamless, requiring minimal documentation and making it easy to manage.

 

High Returns

VPF offers the same interest rate as EPF, which is generally higher than traditional savings options like fixed deposits. This ensures better long-term growth, especially when contributions are made consistently over the years.


Easy Transfer

VPF accounts are easily transferable when changing jobs, as they are linked to your EPF account and UAN. This ensures continuity of investment without disruptions, helping maintain compounding benefits across your career.

 

Benefits of VPF: Why it’s worth considering

  • Flexibility to contribute more: You can choose how much you want to contribute—up to 100% of your basic salary + DA.
  • Loan facility: You can avail loans against your VPF balance during emergencies, based on company policies.
  • Government-backed security: Just like EPF, VPF is backed by the government, making it a low-risk and stable option.
  • Disciplined savings: Since the contribution is auto-deducted from your salary, you build a solid savings habit without even trying.

Build a diversified portfolio! Use VPF for retirement savings and consider Bajaj Finance FDs for mid-term goals with flexible tenures (ranging from 12 to 60 months) and assured returns (of up to 7.75% p.a.). Open FD.

Also Read: VPF vs PPF

VPF interest rate 2025-26

For FY 2025-26, the VPF interest rate stands at 8.25% per annum, slightly higher than many traditional savings instruments.

Eligibility: Who can invest in VPF?

Only salaried individuals registered under EPF and receiving salaries through recognised payroll accounts can contribute to VPF.

How to open a VPF Account

Opening a VPF account is straightforward and employer-driven:

  1. Submit a written request to your employer/HR.
  2. Mention the percentage of basic salary + DA you want to contribute.
  3. Your VPF account will be linked with your existing EPF account.

Note: Once opted in, you must continue contributions for a minimum of 5 years.

Looking for a lump-sum investment alternative? A Bajaj Finance FD is ideal for locking in your funds with guaranteed growth and flexible payout options. Check latest rates.

Documents required to open a VPF Account

While most of the paperwork is handled by your employer, the following documents may be needed:

  • Registration certificate of your employer
  • Business registration (Form 9 & Form D)
  • MOA & AOA (for private firms)
  • Form 24 and Form 29
  • Other documents as per HR/Finance department’s policies

Fixed Deposit

  1. Trusted by over 5 lakh customers
  2. Fixed Deposits worth more than Rs. 50,000 crore booked
  3. Rated CRISIL AAA/STABLE and [ICRA]AAA(STABLE)
  4. Up to 0.35% p.a. extra interest offered for senior citizens
  5. Flexible interest payout options available - Monthly, Quarterly, Half-yearly, Annually or at Maturity

By proceeding, you agree to our Terms and Conditions

VPF withdrawal rules

You can partially or fully withdraw your VPF balance under specific conditions:

Permitted withdrawals:

  • Medical emergencies
  • Children’s education or marriage
  • Purchase or construction of a house
  • Retirement or resignation
  • In the event of the account holder’s death (nominee gets full payout)

Withdrawals before 5 years are taxable.

Need funds before retirement? Choose a Bajaj Finance FD with a loan against FD facility—get liquidity when you need it, without breaking your investment. Check eligibility!

Tax benefits of VPF

One of VPF’s biggest advantages is its Exempt-Exempt-Exempt (EEE) status:

  • Exempt on contribution: Up to ₹1.5 lakh under Section 80C
  • Exempt on interest earned
  • Exempt at maturity

However, if funds are withdrawn before 5 years, they become taxable under income tax rules.

Contribution limits

There is no upper limit set by the government, but you can contribute up to 100% of your basic salary + DA. Employers are not required to match VPF contributions.

How to check the VPF balance?

Here are the steps to check VPF balance:

  • Visit the official EPFO website.
  • Go to ‘Our Services’ and select ‘For Employees’.
  • Click on ‘Member Passbook’ under the Services section.
  • Log in using your UAN and password.
  • Select your Member ID.
  • Click ‘View Passbook’ to see your EPF passbook containing VPF contribution details.

Fixed deposit variants

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VPF vs EPF: Know the difference

Aspect

EPF

VPF

Account Type

Mandatory

Voluntary

Interest Rate

8.15% p.a.

8.25% p.a. (2024–25)

Tax Benefits

Up to Rs. 1.5 lakh (Sec 80C)

Same as EPF

Withdrawal Flexibility

Limited to specific cases

Similar to EPF

Employer Contribution

12% of basic + DA

Not applicable

Employee Contribution

12% of basic + DA (mandatory)

Up to 100% of basic + DA (voluntary)


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Also Read: PF Withdrawal Rules

Conclusion

The Voluntary Provident Fund (VPF) is a powerful yet often overlooked tool for those seeking financial security in retirement. With its government backing, high-interest rates, and triple tax benefits, VPF offers an excellent route for disciplined, long-term savings.

If you are serious about retiring comfortably, consider combining your VPF strategy with other safe investment options like Bajaj Finance Fixed Deposits, offering assured returns and capital protection. Check rates.

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Frequently asked questions

Is VPF tax free?

Yes, VPF contributions (up to Rs. 1.5 lakhs annually) are tax-free under Section 80C of the Income Tax Act.

Who is eligible for VPF account?

Only salaried individuals already enrolled in a mandatory Employee Provident Fund (EPF) account can contribute to VPF. It's essentially an additional voluntary contribution option within the EPF framework.

Is VPF taxable above Rs. 2.5 lakh?

The VPF contribution itself remains tax-free. However, the interest earned on your total VPF contributions becomes taxable if the combined annual contribution amount exceeds Rs. 2.5 lakhs. This applies only to the interest portion earned on the amount exceeding the limit.

What is the interest rate on Bajaj Finance Fixed Deposits?

Bajaj Finance offers attractive FD rates of up to 7.75% p.a., depending on tenure and customer profile (senior citizens, for example, get higher rates). Open FD.

Can I withdraw VPF after 5 years?

Yes, you can withdraw your VPF balance after completing 5 years. Once the 5-year period is over, the withdrawal is treated as tax-free, provided all conditions are met. You may also withdraw the amount fully at the time of resignation or retirement. Premature withdrawals before 5 years may attract tax.

Is it good to invest in VPF?

VPF can be suitable for salaried employees seeking stable, long term retirement savings. It offers EPF linked interest rates, Section 80C tax deductions up to Rs.1.5 lakh, and government backed safety, making it a conservative saving option.

Can I withdraw money from VPF?

VPF withdrawal rules are similar to EPF. Partial withdrawals may be allowed under specific conditions, while full withdrawal generally applies after retirement or long unemployment, subject to EPFO guidelines and tax rules

What is the Rs. 2.5 lakh limit on VPF?

Interest earned on employee contributions exceeding Rs.2.5 lakh in a financial year becomes taxable. Contributions within this threshold continue to enjoy tax free interest benefits under current EPF and VPF tax provisions.

Can we stop VPF anytime?

Employees can request to stop or modify VPF contributions through their employer, but changes usually apply from the next financial year. Rules may vary by organisation policies and EPF contribution structure.

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Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

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