VPF vs PPF savings: Which one is a better investment to save tax?
New Delhi : If you are a salaried person and invest in PPF (Public Provident Fund) to save tax under section 80C of the Income Tax, 1961; here is another option you may consider - VPF (Voluntary Provident Fund) - it provides same tax benefit and is even giving better interest rates.
As per current interest rates, money parked in VPF may give you a difference of almost 1 per cent compared to PPF. The VPF offers a higher interest rate because it always matches the Employees Provident Fund (EPF) interest rate, which is mostly a notch higher than the PPF.
On safety terms, VPF is as safe as PPF because it is backed by the government.
Three reasons why VPF is better than PPF:
1: Better returns in the last five years
2017-18: The VPF/EPF interest rate was 8.55% while the PPF rate varied between 7.6% and 7.9%
2016-17: The VPF/EPF interest rate was 8.65% while the PPF rate varied between 8% and 8.1%
2015-16: The VPF/EPF interest rate was 8.8% while the PPF rate was 8.7%
2014-15: The VPF/EPF interest rate was 8.75% while the PPF rate was 8.7%
2013-14: The VPF/EPF interest rate was 8.75% while the PPF rate was 8.7%
2: Easy process of investment:
For PPF you need to visit the post office or bank or do it via internet banking. But for VPF, you just need to inform the employer and a share from your salary will start getting into the VPF. In case you change the employer, the same will get transferred with your UAN of EPFO.
3: Same Tax benefit
Both VPF and PPF comes with the same amount of tax benefit. Under Section 80C. Just like the PPF, it enjoys the highest EEE (exempt-exempt-exempt) category of tax deduction.