Like the EPF, the VPF has an implicit government guarantee—ergo, it scores the maximum on safety.
The VPF enjoys the same rates as the EPF.
the 8.1% declared by the Employees’ Provident Fund Organisation (EPFO) for the year ended March 2022 applies to VPF too
The amount invested is eligible for tax deduction under Section 80C, up to Rs 1.5 lakh (US$1,800) a year. The interest earned is exempt from tax too (up to a limit, anyway. But more on this below). And so is the maturity amount. So, the post-tax return on the EPF and VPF is far higher than from bank deposits, where the interest is taxable.
From the fiscal year that ended March 2022, if an employee puts more than Rs 2.5 lakh (US$3,000) a year into their EPF account (including VPF), the interest on the excess contribution above Rs 2.5 lakh is taxable.
before putting the additional money in the VPF, exhaust tax-exempt options like the PPF (max Rs 1.5 lakh a year); these could yield better post-tax returns than the incremental investment in the VPF.
