Provident Fund (PF) is a popular approach to saving for long-term investments. An employee pays 12 per cent of his/her base salary and dearness allowance (DA) to the PF balance. For example, if an individual's basic pay and DA is Rs 18,000, their PF contribution would be Rs 18000X12/100, which is Rs 2,160. 

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However, many employers provide their employees with a flexible tool to enable them to change their salary structure if they are contributing a minimal amount to their PF balance. Using this tool, employees may ask their employer to increase their PF contribution. 

This may result in a somewhat lower in-hand income, but larger PF contributions can help a person to save more money while also lowering income taxes. Furthermore, after each assessment cycle, your salary in hand will grow, which will alleviate this issue as well.

Here's how you can increase your EPF contribution by more than 12%

If you wish to raise your EPF contribution to get greater interest rates, you can do so through the VPF (Voluntary Provident Fund). However, it cannot be done directly. 

VPF is taken from employees' salaries only after their permission. This allows an employee to increase his EPF contribution as much as he wishes without restriction, and the advantages of VPF are the same as EPF. 

VPF provides a return of 8.10 per cent per annum. By investing in this scheme, people get tax benefits under Section 80C of the Income Tax Act; returns on maturity, too, are not taxed. 

However, if a person invests more than Rs 2.5 lakh per annum in PF and VPF together, the returns on the EPF become taxable. 

How to invest in VPF? 

To invest in VPF, contact your HR department, and they will assist you in opening a VPF account in conjunction with an EPF account. To do so, fill out a form with information such as monthly deductions, percentages, and so on. The lock-in term for VPF is five years. 

Tax redemption and transfer of funds 

The VPF rules are the same as EPF. If you change your company, the VPF amount can be transferred to your new company and no tax is levied on this. This also comes under 80C and one can avail of tax benefits of up to Rs 1.50 lakh in a year.