Learn the key differences between VPF and PPF.
3 min

When it comes to long-term saving plans, both the Voluntary Provident Fund (VPF) and the Public Provident Fund (PPF) offer secure, tax-advantaged options backed by the Indian government. However, each has unique features that might make one a better fit for your financial goals.

What is VPF?

Voluntary Provident Fund (VPF) works as an extension of your existing Employees' Provident Fund (EPF). With EPF, salaried employees in eligible organiasations must contribute 12% of their basic salary, which is then matched by an equal contribution from their employer.

EPF contributions are locked in until you retire or qualify for a premature withdrawal under specific circumstances. If you want to contribute more than the mandatory 12% of your basic salary, the Voluntary Provident Fund (VPF) provides that option.

VPF contributions are added to your existing EPF account and earn the same interest rate as your regular EPF contributions. The advantage of VPF is that you can contribute up to 100% of your basic salary and dearness allowance.

If you want to invest more, consider a fixed deposit, which offers guaranteed returns.

Tax benefits of Voluntary Provident Fund (VPF)

  • Contributions: Your VPF contributions are tax-deductible under Section 80C of the Income Tax Act of 1961, up to the combined annual limit of Rs. 1.5 lakh.
  • Interest earned: The interest you earn on your VPF balance is completely tax-free.
  • Maturity amount: When your VPF matures, the entire amount you receive is exempt from tax.

What is Public Provident Fund (PPF)

Unlike VPF, the Public Provident Fund (PPF) is a government-backed savings scheme open to everyone. Any Indian citizen can open a PPF account, regardless of whether they are salaried, self-employed, a student, or retired.

The Government of India directly manages the operations of the Public Provident Fund. As such, the central government sets the PPF interest rate and pays it to subscribers. PPF interest rates are revised quarterly, often aligning with prevailing rates on government bonds.

PPF: triple tax advantage

  1. Contributions: Your annual PPF contributions, up to the maximum limit of Rs. 1.5 lakh are tax-deductible under Section 80C of the Income Tax Act.
  2. Interest earned: The interest you earn on your PPF balance each year is completely tax-free. This allows your money to compound faster!
  3. Maturity amount: When your PPF account matures, the entire amount you receive, including the principal and accumulated interest, is exempt from tax.

Interest rates: VPF vs. PPF

  • VPF: The interest rate you will get on your VPF account is the same as what you earn on your EPF account, which is currently 8.25%.
  • PPF: PPF accounts offer a slightly lower interest rate, currently at 7.1%.

Note: Interest rates for both VPF (linked to EPF) and PPF are subject to change. The government periodically revises these rates.

Bajaj Finance offers one other highest interest rate of up to 8.85% p.a. on their fixed deposit. And is trusted by over 5 lakh customers.

VPF vs PPF vs Bajaj Finance FD

Parameters Voluntary Provident Fund (VPF) Public Provident Fund (PPF) Bajaj Finance FD
Interest Rate 8.25% 7.10% Up to 8.85% p.a.
Eligibility Employees working in the eligible organisation Any Indian resident Any Indian citizen
Contribution Any amount up to 100% of the subscriber's basic salary and dearness allowance Annual minimum contribution - Rs. 500; annual maximum contribution- Rs. 1.5 lakh Minimum contribution - Rs. 15,000, maximum contribution- 8.85%
Premature withdrawals For medical purposes, own marriage or that of a dependent individual, repayment of a loan, purchasing or constructing a house, unemployment for more than 2 months. Allowed after 7 years from the date of account opening for a child's education or medical purposes. Premature withdrawal is allowed with some charges
Maturity period Until retirement 15 years 12 months to 60 months


Making the decision

Consider the following when choosing between VPF and PPF:

  • Your employment status: VPF is only available to salaried employees.
  • Desired contribution amount: VPF allows you to save beyond your mandatory EPF contributions, while PPF has an annual limit.
  • Need for flexibility: If you anticipate needing access to your funds before the long-term maturity, VPF might be a better fit.


Both VPF and PPF are excellent option for building a secure financial future. The best choice for you depends on your individual circumstances and savings goals. It is wise to consider your income level, desired contribution amounts, and need for flexibility to determine which option, or combination of both, aligns best with your financial journey.


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.