Understanding Voluntary Provident Fund: Is Employer Contribution Included?

Dear Senior,

Kindly provide me with some information on the Voluntary Provident Fund (VPF) as soon as possible. I need the info. My major doubt is: is there any employer contribution in VPF, or is the contribution only from the employee's side in the case of VPF? Also, please tell me the minimum and maximum amount or percentage of VPF. Please do reply.

Regards,
Bala Sandhya SL

Thank you very much, Malik, for your information. The maximum is 12%, which means what is the minimum amount the employee should pay for voluntary PF or VPF. Other seniors, please post your answers. Only from the seniors, we juniors can improve our knowledge. Thank you once again for the forum. Cite HR.

Dear Bala,

12% is the employee's share towards EPF, and 12% is the employer's share, out of which 8.33% goes to the pension, and the rest is the provident fund. Now, you can pay a maximum of 12% as VPF. The maximum, and the minimum is as per your choice. The employer will only pay 12%, so VPF and EPF can be up to 24%.

Thank you,
J. S. Malik

Hi Bala,

Voluntary PF is over and above the statutory PF of 12%. There is no limit for VPF. An employee can contribute as much as he or she may wish; earlier, there was a cap on this. The employee is not required to pay any contribution towards VPF.

Hope this helps.

Regards,
Atishai

Correction:

"Voluntary PF is over and above the statutory PF of 12%. There is no limit for VPF. An employee can contribute as much as he/she may wish; earlier, there was a cap on this. The employer is not required to pay any contribution towards VPF."

Apologies...

I would tell you in layman's terms that the employer's contribution and the employee's contribution are a maximum of 12%. If you wish to save more, you can increase your contribution, but the employer's contribution will remain the same at 12% (fluctuations may occur based on company policy).

Wow, that's really useful information. I got it clearly. I thought VPF was something entirely different from the normal PF, but after your reply, I understood it's just an additional benefit contributed by employees to gain more benefits in the future. Am I correct? Thank you. :icon1:

Dear Balaji,

Voluntary contribution depends on the employee; he can contribute up to 100%. However, you need to take permission from EPFO. As for the employer, the maximum contribution is 12%. If the employer is willing to pay more towards EPF, they can do so.

Thank you.

Dear All,

In my view, the maximum contribution towards PF, including VPF, is 20%. The employer's contribution will be restricted to 12% only. Approval is needed from the RPFC office. The employee is entitled to interest on such accumulations. The employer's service charge will increase to some extent (0.01%).

Hope this is the latest status.

Regards,
ACCHR

I am 100% in agreement with you guys, but the basic condition is that the total deduction, including PF, ESI, Gratuity, VPF, etc., should not exceed 50% of the total amount that you are going to pay.

Hi,

In VPF, you can contribute more to PF to save on taxes, as you will receive a tax rebate on your PF contributions. However, the employer's contribution will remain at 12%.

Hi friends,

I have just joined a company as an HR executive. I don't have a payroll format. Please help me. I really need that format.

From our salary, 12% is deducted as PF. I have some doubt on this. How do we, as employees, track whether that deduction along with the employer's contribution is deposited correctly into our PF account? Also, how can we track the total available balance in our PF account?

Regards, Saranya

There is no ceiling on the contribution of VPF. The VPF contribution is only based on the willingness of the employee and should be a specific percentage of the PF wage, not a fixed amount like Rs. 1000/- or Rs. 500/-. It should always be a certain percentage of the PF wage. There is no need to pay the employer contribution for this. It is a voluntary Provident Fund contribution by the employee. Employees generally opt for VPF for IT purposes and savings.

KALIDAS

I completely agree with Atishai. VPF is the contribution made voluntarily by the employee towards his PF account.

Regards,
Sashmita

There is no limit to what an employee should contribute in VPF; it means he/she can contribute 100% of their basic+DA salary. The employer will not contribute at the same rate as the employee. The employer will only contribute the 10% or 12% that applies to the establishment.

Best Regards

Dear Senior,

Kindly give me some information on the Voluntary Provident Fund (VPF) as soon as possible. I need the info. My major doubt is, is there any employer contribution in VPF, or is the contribution only from the employee's side in the case of VPF? Also, tell me the minimum and maximum amount or percentage of VPF. Please do reply.

Regards,
Bala Sandhya SL

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The VPF means it depends upon you how much money you desire or how much percentage of your basic salary to deduct from your salary and deposit along with your regular PF deposit, i.e., 12% + 12% from the employer. On VPF, the employer does not have any liability; it is your own, and you will get the same interest as you are getting on the regular PF. Also, you cannot withdraw in between, only on retirement or resignation. This is as per my knowledge.

Sunil Prabhakar
Addl. Manager HR

Dear friends,

What is ESIC? According to my knowledge, it provides some benefits for sickness and others. Suppose we are not taking any benefits, then what happens according to this Act? Can anyone explain this act? Please.

Thank you.

Hi,

For the deduction of Voluntary Provident Fund, you have to apply for regularizing membership/Provident Fund contributions deduction on salaries over and above Rs. 6500/- or at a higher rate.

But the employer should pay only 12% on the basic rate. An employee can deduct the Provident Fund up to 32% of his basic. For this, he gets an 8.5% interest rate.

- Pravin

Voluntary contribution is that which the individual wishes to deposit in his/her provident fund. It can be any amount. The statutory deduction is a minimum of 12% from the employee's side and 12% from the employer's side. However, voluntary contribution depends on the individual and the amount they are able to set aside from their salary on a monthly basis. The advantages include income tax savings, a higher rate of interest, etc.

Hi,

As per my knowledge, the total PF contribution is 24% + 1.61% = 25.61%. Here, 24% means 12% from the employee and 12% from the employer. The remaining 1.61% is for PF admin charges. Within the 12% employee contribution, 8.33% is for EPS and 3.67% is for EPF.

Thank you.

Dear Bala,

The PF contribution is 12% both from the employer and employee sides. The 12% is compulsory, but if an employee wishes, he/she can increase the percentage of their PF share from the basic salary. However, the employer's contribution remains the same. There is no obligation on the employer to increase their share percentage in VPF.

If you need further clarification, please feel free to contact me at skh.1983@gmail.com.

Regards,
Shikha Jain

Dear,

According to me, an employee can invest a maximum of 27% of his salary (Basic + any DA + Food concession, if any) towards PF contributions. Most companies are obligated to pay 12% PF, giving employees the option to contribute the remaining 15% towards VPF. However, the company contributes only 12%.

For example:
Salary - Rs. 10,000.00
Employee Contribution - Rs. 1,200.00
Company's Share to EPF - Rs. 659.00
Company's Share to FPS - Rs. 541.00
Employee's Share towards VPF (Max 15%) - Rs. 1,500.00

However, given the current interest rates, investment patterns, and the availability of more options such as PPF/MFs, VPF does not hold significant appeal in the employee community. In the past, many employees' savings were solely through 'forced' deductions.

Thanks & Best Regards,
Venkat

Dear all,

I want help in forming the HR policy for a new organization. As I am also new in this field, please help.

Dear All,

Enclosed is the document on the salient features of PF. The same can be downloaded from DKM Online - Download Section.

Hope this is helpful to all of us.

Regards,
Atishai

Hi all,

Voluntary PF is the contribution of the employee's own funds and not from the employer's side, with no limit. In our company, the contribution is restricted and compulsory at 12% from the employer's side, but employees can contribute more than 12%.

Thank you,
Tajender K. Bajaj

Hi, Can the employer restrict himself from paying PF contribution to employees earning above Rs. 6500? What is the legal procedure? Please update me.

In the EPF Act, there is a limit of Rs. 6500/-, and according to that, employers are required to contribute @ 6500/-. However, if the basic salary of an employee is more than 6500/- at the time of joining and the employee is not in favor of EPF, then the employer has to take Form 11 from the employee. Employers are not required to contribute on the full basic, i.e., above 6500/-. Another point to note is that if an employee is covered under the EPF Act and after an increment, their basic salary increases and exceeds 6500/-, then in this case, the employee is also required to contribute up to Rs. 6500/- during their service.

Dear All,

VPF is over and above the statutory rate of 12%, which only the employee contributes to. The employer will not contribute anything towards the employee's VPF contribution. In fact, there is no ceiling on VPF. The entire amount of VPF earns tax benefits for the employee.

If an employee is not a member of the Provident Fund (PF), can he/she only deposit Voluntary Provident Fund (VPF)? If yes, what is the procedure for VPF?

My basic is Rs. 7500, but my PF is not deducted due to the cross limit of Rs. 6500 as per PF rules. Can I apply for Voluntary PF deduction?

Regards, Robins Christian

There is a cap of 40% on VPF.

Dear Bala,

Actually, the contribution is 12% from the employee's side and 12% from the employer's side, plus some other administrative charges.

So, the government has set a minimum of 12% from the employee's contribution, and if the employee wishes to contribute more than 12%, they can voluntarily do so. Any additional contribution made by the employee beyond 12% is considered voluntary.

Mahesh

My employer is not providing the facility of VPF. How can I contribute to VPF? Is there any way?

Provident Fund (PF) & Voluntary Provident Fund (VPF):
PF is automatically deducted from your salary. Both you and your employer contribute to it. While the employer's contribution is exempt from tax, your contribution (i.e., employee's contribution) is counted towards Section 80C investments. You also have the option to contribute additional amounts through voluntary contributions (VPF).

The current rate of interest is 8.5% per annum (p.a.) and is tax-free.

Voluntary Provident Fund (VPF) Details

Voluntary PF is deducted upon the request of the employee by the employer from his/her salary, as a fixed amount. VPF is not limited. It is similar to a Recurring Deposit opened in a bank. It is an extra saving amount that you contribute to the PF department, and interest will be calculated.

Thanks,
SANJIV GUPTA

There is no limit for VPF; an employee can contribute 100% from BASIC and DA. I have checked with the respective local regional EPFO.