Savings Schemes
by 5paisa Research Team Last Updated: 2023-08-22T16:16:14+05:30
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The VPF vs PPF are the most well-known provident funds in India. These provident funds can provide average returns to individuals while ensuring the highest corpus safety. Even though both VPF and PPF are provident funds, there is a massive difference between them.
Having good knowledge about the difference between VPF and PPF will enable you to choose the right provident fund for your retirement planning. Let’s learn about them in detail.

What is VPF?

The voluntary Provident Fund, commonly known as VPF, is known as the extension of the EPF [Employees Provident Fund]. Under the EPF, all employees who work in eligible corporations should contribute 12% of their salary, and the employer has to contribute the same amount.
EPF contributions are locked in till the employees retire or become qualified for a premature withdrawal under specific conditions. When employees contribute a lot more than the minimum requirement, they can do so under VPF or Voluntary Provident Fund provisions.
But the conditions of the employers will remain the same. Voluntary Provident Fund provisions get deposited in the employee’s EPF account and will earn the same type of interest as the EFP contribution.

Eligibility Criteria for VPF

Under the VPF vs PPF, there are some eligibility criteria that you have to fulfil. Here, in this section, you will find the eligibility criteria for initiating the Voluntary Provident Fund:
●    You have to be an employee/worker within an organised sector.
●    You need to be an employee of a company that has a workforce of over 20.
●    At times, organisations can also open an Employees Provident Fund for all their employees without fulfilling the smallest threshold.

Contribution to the Voluntary Provident Fund

You will not find any laws binding the sum of contributions to the VPF or Voluntary Provident Fund. This is another difference between VPF vs PPF accounts.
You can deposit 100% of your salary, which includes the dearness allowance and the basic pay, in the form of a monthly contribution to the VPF without experiencing any issues.

Maturity Period for Voluntary Provident Fund

Voluntary Provident Funds stay active until an employee retires or resigns. You can transfer your Employees Provident Fund account once you change employer. This is also a primary difference between the VPF vs PPF accounts.
Besides that, you can prematurely withdraw your funds from the EPF account under several conditions. These conditions are:
● You were out of employment for over 2 months
● It’s your wedding or of someone who is financially dependent
● Repaying back a loan
● Medical-related purposes.

Tax Implications on Voluntary Provident Fund

When it comes to the VPF vs PPF tax implications, you will find they are different from one another. For the Voluntary Provident Funds, which falls under the EEE [Exempt-Exempt-Exempt] category.
This clearly means that all the contributions which were made to the Voluntary Provident Fund are exempted from the taxation u/c 80C of the I-T Act 1961 with a limit of INR 1.5 Lakhs.
Apart from that, the interest earned through the balance and the maturity amount also gets exempted from the wealth tax.

What is PPF?

Public Provident Fund, also known as PPF, is a long-term scheme that is available for self-employed individuals and also for employees. Public Provident Fund provides tax-free maturity amount, tax deductions on the contributions and tax-free interest earnings.
Furthermore, it also has a 15-year lock-in period, but after a certain period, you can opt for partial loans and withdrawals. Public Provident Funds is perfect for people who want long-term savings paired up with flexibility for partial withdrawals.
When it comes to PPF vs VPF, PPF is a separate scheme that is not like VPF and people who opt for it will also receive tax-related benefits.

Eligibility Criteria for PPF

Individuals who are a citizen of India and also resides in the nation is qualified to open a Public Provident Fund account.
This means NRIs [Non-resident Indians] cannot open up a PPF account in the country. Similarly to that, HUFs [Hindu Undivided Family] are also not qualified to open up a Provident Fund Account in India.

Maturity Period for Public Provident Fund

For the Public Provident Fund, the maturity period is for 15 years. This is one of the primary differences between Voluntary Provident Funds and Public Provident Funds. Also, all the PPF subscribers can easily extend the lock-in period through a block of 5 years. They can do so when the stipulated time ends.

Tax Implications on Public Provident Fund

Under the VPF vs PPF category, you can deposit a maximum amount of INR 1.5 Lakhs yearly in a Public Provident Fund account. Doing so will help you get an exemption from tax under Section 80C of the Income Tax Act 1961.
The balance withdrawn and the interest earned during the end of the maturity will also get exempted from taxation.

Difference Between VPF vs PPF

Even though you know the difference between PPF vs VPF, but to have a proper understanding about them, this table will can help:

The Parameters

Voluntary Provident Fund [VPF]

Public Provident Fund [PPF]

Who Can Invest?

All employed individuals

All Indian residents, except NRIs

Minimum Period of Investment

Till the individual resigns or retires

Up to 15 years

Employee Contributions on Basis + DA

Up to 100%


Employer Contribution



Taxation on Maturity Returns

It’s completely tax free


Tax Deduction

According to Section 80C of the Income Tax Act 1961

According to Section 80C of the Income Tax Act 1961


Account can be transferred to a new firm till retirement.

Can be extended indeterminately by extending for 5 years each

Maximum Loan

Partial withdrawals are allowed

50% loan for up to 6 years

Key Difference Between PPF Account and VPF Account

There are some primary differences between VPF and PPF accounts. Let’s find out what they are:
● Voluntary Provident Fund accounts are only for employees, and the Public Provident Fund account is only for people working in the unorganised sectors and those who are self-employed.
● Interest provided on the VPF account is 8.5%. This interest is the same as the EPF account. PPF account, on the other hand, provides an interest of 7.1% on savings.
● The returns provided from the Public Provident Fund account are completely free from tax. But the contributions made on the Voluntary Provident Fund account certainly qualify for the tax deduction according to Section 80C of the Income Tax Act of 1961.

How to Invest in PPF Account?

Investing in the PPF account through the online platform is the best way. To invest in the account, you should:
● Log in to the Net-Banking account
● Add your PPF account as the beneficiary
● Transfer your funds through Mobile Banking or Net-Banking

How to Invest in VPF Account?

To invest in the Voluntary Provident Fund account, you must follow these steps:
● Request the HR department or the employer to open a VPF account for you
● Tell them to deduct some funds from your salary for the VPF account
● Make sure to provide your personal information and the amount you wish to contribute to the VPF account.


Both VPF and PPF are the best and the most popular provident funds available in India. If you’re an employee, you can opt for the Voluntary Provident Fund, but if you’re a self-employed individual or work in an unorganised sector, you can choose the Public Provident Fund. Make sure to do your research well before applying for any of the provident funds. 

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