PPF vs VPF: Earning in lakhs? Here is how you can pay less income tax and earn more under Section 80C

PPF vs VPF: Those individuals earning monthly income in lakhs face the headache of saving income tax and earning more returns on their savings under Section 80C. Generally, people invest in Public Provident Fund, Life Insurance, ELSS mutual funds, EPFO etc. to save income tax up to Rs 1.5 lakh investments under Section 80C. However, for those who have a monthly income in lakh don't get the opportunity to invest in PPF, NPS etc. as their mandatory EPFO may consume the Rs 1.5 lakh investment limit. Even if it doesn't cross this limit, they won't have much left to invest under Section 80C. For those, who are investing in PPF to save income tax, investment and tax experts are of the opinion that it's better to invest in voluntary provident fund (VPF) instead of public provident fund (PPF) as the VPF gives 8.65 per cent annual returns along with Section 80C income tax exemption while in PPF, an investor can expect to get 7.9 per cent return along with income tax exemption under the same section.

Speaking on the PPF vs VPF Kartik Jhaveri, Manager — Wealth Management at Transcent Consultancy said, "EPFO is mandatory while PPF is voluntary. But, for those who are investing in PPF for retirement purposes, it's better to opt VPF as it gives 8.65 per cent annual returns which are 0.75 per cent higher than the PPF returns. In fact, for those who draw a monthly salary in lakhs, their Section 80C limit of Rs 1.5 lakh may get consumed by the EPFO itself. However, if the Section 80C income tax exemption limit is available, I advise such employees to opt VPF and invest rest of the balance in VPF instead of the PPF."

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Speaking on the EPFO or VPF benefits than the PPF investment SEBI registered tax and investment expert Jitendra Solanki told Zee Business online, "In EPFO, your employer contributes in your EPFO and hence your EPFO investment is more than what you are investing. So, it's advisable for the salaried person to increase his or her EPFO contribution from his or her salary bracket while joining to get more contribution from your employer. You can opt for VPF as it gives more returns than any other Section 80C investment with the same risk appetite." However, he said that in the case of VPF, your recruiter doesn't contribute for the same but for EPFO, the recruiter is bound to contribute.