Voluntary Provident Fund – Eligibility, Interest Rates & Benefits

What Is VPF?

What Is the Voluntary Provident Fund Interest Rate?

 

The VPF interest rate in 2021 is 8.5%

The table below specifies the VPF interest rate from 2013 to 2021.

Year

VPF Interest Rate

2020-21

8.5%

2019-20

8.5%

2018-19

8.65%

2017-18

8.55%

2016-17

8.8%

2015-16

8.8%

2014-15

8.75%

2013-14

8.75%

Thus, considering the timeline, VPF offers a higher interest compared to PPF, whose current interest rate is 7.1%.

What Are the Important VPF Withdrawal Rules You Need to Remember?

What to Know About VPF Eligibility?

What Are the Documents Required to Open a VPF Account?

How to Calculate VPF Interest Income?

 

Your total Voluntary Provident Fund interest in a year will be a sum of your monthly interest incomes from it. 

Divide the annual interest rate by 1200 and then multiply it by the monthly opening balance to get your monthly interest income. Please note that the opening balance is zero in the first month.

To understand it, let's look at a simple example -

You joined an organisation from 1st April 2021 for a salary of ₹30,000. Your employer contributes 12% of your salary to your EPF account. However, you decide to make an additional contribution to VPF. Accordingly, your employer contributes 3.67% of ₹15,000 to your EPF account. 

Considering the current VPF interest rate of 8.5%, the calculation of VPF interest in 2021-2022 will be as follows -

Months (FY 2021-2022)

Monthly Credited Balance

Monthly Interest Income

April

0

0

May

₹6,550

₹46

June

₹13,000

₹93

July

₹19,650

₹139

August

₹ 26,200

₹186

September

₹32,750

₹232

October

₹39,300

₹278

November

₹45,850

₹325

December

₹52,400

₹371

January

₹58,950

₹418

February

₹65,500

₹464

March

₹65,500

₹510

Total Interest Earned

-

₹3,062

Therefore, you earned a total interest of ₹3,062 on your EPF account. Moreover, you contributed an additional payment of 8% for your VPF scheme. 

Also, VPF is an extension of the EPF account. Therefore, the total interest of EPF is also equal to ₹3,062. You may also maximise the percentage of VPF contribution for more savings for your retirement.

What Are the VPF Tax Benefits?

What Is the Process of VPF Withdrawal?

What Are the Top 3 Advantages of VPF Contribution?

Frequently Asked Questions