EPF vs VPF Difference Explained: What Is VPF and How It Differs from EPF

EPF vs VPF difference is a common topic among salaried professionals looking to strengthen their retirement savings. While EPF is a mandatory deduction from your salary, VPF offers an optional route to grow your provident fund corpus faster. Understanding how VPF works and how it differs from EPF can help you make smarter long-term financial decisions.

What Is VPF ( Voluntary Provident Fund )?

Voluntary Provident Fund, or VPF, is an extension of the Employee Provident Fund (EPF). While EPF requires a fixed contribution, VPF allows salaried employees to voluntarily invest an additional portion of their salary into the provident fund account. It is ideal for those who want disciplined, long-term, and low-risk savings for retirement.

EPF vs VPF Difference: Key Points Explained

Here’s how EPF and VPF differ in a simple way:

• EPF is mandatory for eligible salaried employees
• VPF is optional and depends on employee choice
• EPF contribution is fixed at 12% of basic salary
• VPF contribution can go up to 100% of basic salary
• Both earn the same government-declared interest rate

How Much Can You Invest in VPF?

One of the biggest advantages of VPF is flexibility. You can contribute anywhere between a small extra amount to up to 100% of your basic salary and dearness allowance. This allows you to build a substantial retirement corpus over time.
Currently, VPF earns an annual interest rate of 8.25%, making it a stable and risk-free investment option.

Tax Benefits of VPF




VPF is highly tax-efficient:

• Contributions qualify for tax deduction under Section 80C (up to ₹1.5 lakh)
• Interest earned remains tax-free if total EPF + VPF contributions are within ₹2.5 lakh per year
• It follows the EEE (Exempt–Exempt–Exempt) tax structure, making it attractive for long-term investors

How to Invest in VPF?

Investing in VPF is easy and hassle-free:

• Inform your company’s HR or Payroll department
• Fill out a simple form stating your desired contribution
• Some employers offer VPF activation through an online HR portal

Once activated, the chosen amount is automatically deducted from your salary every month. If you change jobs, your EPF and VPF balances are seamlessly transferred to your new employer.

How to Check Your VPF Balance

You can track your VPF savings anytime using:

• EPF Passbook on the EPFO portal
• UMANG mobile app
• DigiLocker

EPF vs VPF Difference




Understanding the EPF vs VPF difference can help you optimise your retirement planning. While EPF builds the foundation, VPF allows you to accelerate savings with higher contributions, assured returns, and tax benefits. For salaried individuals with long-term goals, VPF can be a powerful and safe wealth-building tool.