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VPF Limit: If you are also investing under Voluntary Provident Fund (VPF), then there is good news for you. The government is considering increasing the limit of tax free interest in VPF under EPFO from Rs 1.5 lakh. At present, like EPF, there is no tax on interest up to Rs 1.5 lakh. The Ministry of Labor and Employment is considering this matter.
This issue will be taken up next year
The issue of increasing the tax duty interest limit in Voluntary Provident Fund will be discussed in the budget for the financial year 2025-26. The tax free earning limit may be increased with the aim of attracting investors to the fund. The government is planning to make VPF easier with the aim of helping middle class people deposit more money in EPF with the aim of creating a larger and adequate retirement capital in the future.
Earlier, the government had made investment on EPF deposits up to Rs 1.5 lakh tax free. Interest earned more than this is taxed.
Tax benefits on investment in VPF
The government has taken this decision so that tax can be imposed on additional interest income. This rule was for those people whose salary is high and they deposit more money in EPF to avoid tax. Similarly, you do not have to pay any tax on the amount deposited in VPF and the interest received on its withdrawal up to Rs 1.5 lakh.
What is VPF?
Voluntary Provident Fund is an alternative investment scheme of EPFO. In which salaried employees do not have to compulsorily allocate a fixed portion of their salary. They can invest in it as per their choice. However, all the benefits are at par with the PF scheme of EPFO. In which currently the interest is 8.1 percent. Those who want to have more and secure funds available for retirement can alternatively allocate up to 100 percent of the salary in a provident fund. In which like PF scheme Rs. No tax has to be paid on interest up to Rs 1.5 lakh.