The non-taxable contribution account shall have the details of opening balance, contribution below the threshold, interest earned on such contribution and withdrawals made in the relevant year.
The taxable contribution account shall have the details of the contribution made above the threshold, interest earned thereon and withdrawals made in the relevant year.
Tax exemption: What about contributions?
Contribution of up to ₹1.5 lakh towards VPF is allowed as a deduction under Section 80C.
Any lumpsum amount earned from VPF would be exempt from tax provided the withdrawal is made after five years.
In case of partial or full withdrawal before such period of five years, the same would be subject to tax.
VPF scheme: Key rules and benefits — Quick look
Contribution Limit: You can contribute up to 100% of your Basic Salary + DA towards VPF.
Same High Interest: VPF contributions earn the exact same interest rate as standard EPF (currently 8.25% p.a.).
Employer Match: Your employer is NOT required to match your VPF contributions. They will continue to match only the mandatory 12%.
Tax Exemption (80C): VPF contributions qualify for tax deductions under Section 80C, up to ₹1.5 Lakhs.
Lock-in Period: Just like EPF, VPF is locked in until retirement or resignation (minimum five years of continuous service for tax-free withdrawal). Partial withdrawals are allowed for specific emergencies like medical, education, or housing.
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