Voluntary Provident Fund (VPF): How to Start, Limits and Tax
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VPF is extra money you choose to put into your EPF on top of the compulsory 12%, through your employer's payroll. It earns the same interest (8.25% for 2025-26), and your employer does not have to match it. Ask HR to start it. Interest on your own contributions above ₹2.5 lakh a year is taxable.
How to start
- Tell HR the extra % or amount you want
- Payroll deducts it with the 12%
- Credited to your EPF; earns the EPF rate
- You can contribute up to 100% of your PF wages (basic + DA) in total.
- The employer's share stays at 12% of the capped wage; VPF is yours alone.
- It shows as part of your employee share in the passbook.
Tax
Taxable income
Interest on your own contributions (12% plus VPF) above ₹2.5 lakh a year is taxable each year. Plan the amount so you stay within the limit if you want fully tax-free interest.
No income tax to pay
VPF is a simple way to save at the EPF rate. Keep in mind that, like all EPF, 25% must stay in the account while you are working.
Compare with bank deposits on our interest rates page.
Frequently asked questions
Can I stop VPF midway?
Yes, tell your employer; contributions return to the compulsory 12% from the next payroll.
Sources
- EPFO: Wage ceiling FAQs (8.25% for 2025-26).
- EPFO: EPF Scheme.
- Income Tax Department (tax on interest above the contribution limit).