Understanding Voluntary Provident Fund: Tax Benefits and Company Advantages?

Please let me know if we are contributing to the Voluntary Provident Fund in total.
1) Do we get the income tax rebate?
2) Is it taxable?
3) What would be the percentage?
4) Is the company benefited in any way?

Regards,
Ravi

Hi all,

My question is, suppose an employee's basic salary is Rs. 6,500/- and a deduction of Rs. 780/- is made from his salary on one side. What will happen? What will be the contribution if his basic salary is increased to Rs. 7,000/-? Will his contribution continue, and if yes, on how much basic salary?

Thanks,
K.K

Hi, Mr. Ravi.

Yes, you can take the VPF amount as a rebate, and it is not taxable. You can contribute your VPF amount up to 88%. For example, if your basic is Rs. 6500, out of this amount, 12% will go to PF (Rs. 780), and the remaining Rs. 5720 can be contributed as VPF.

Hi,

Can anyone please send me some more information on VPF? How can a letter be drafted to get this done with my company? What are the benefits? I am aware that the lock-in period is till retirement in case of VPF. Is there anything else I need to know like opening the VPF account if an employee approaches me?

Thanks

Any contribution voluntarily towards EPFO is non-taxable. The percentage for voluntary contribution should be up to 100% of the basic salary. Apart from the mandatory 12%, if the voluntary contribution is marked in the company balance sheet, it comes under expenditure, and the tax liability towards the company minimizes.

Thanks & Regards,
Sumit Kumar Saxena