Voluntary Provident Fund: VPF Benefits & How to Open Account

Thinking beyond EPF? The Voluntary Provident Fund lets you turbocharge your retirement savings—tax-free and with zero risk. Find out how this underused gem can secure your golden years
Voluntary Provident Fund
4 mins
30-July-2025

For many working professionals, retirement planning often starts and stops with the Employee Provident Fund (EPF). But what if you want to do more? That’s where the Voluntary Provident Fund (VPF) comes in—offering higher flexibility, better savings potential, and the same safety net as EPF.

Whether you're looking to top up your retirement fund or simply want a tax-efficient way to save more, VPF could be the missing piece in your financial puzzle.

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)?

Done maxing out your EPF?

Open a Bajaj Finance Fixed Deposit to continue building wealth safely. Enjoy up to 7.30% p.a. interest and AAA safety ratings from CRISIL and ICRA. Open FD.

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 7.30% p.a.). Open FD.

Also Read: VPF vs PPF

VPF interest rate 2024-25

For FY 2024–25, 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.

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)


Finished planning your retirement with VPF? Lock in extra savings in a Bajaj Finance FD—stable, low-risk, and ideal for short- to mid-term goals. Earn up to 7.30% p.a. returns. Open FD.

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.

Calculate your expected investment returns with the help of our investment calculators

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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 7.30% p.a., depending on tenure and customer profile (senior citizens, for example, get higher rates). Open FD.

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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.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.