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    Home › HR Glossary › VPF (Voluntary Provident Fund)
    HR Glossary

    VPF (Voluntary Provident Fund)

    Voluntary Provident Fund (VPF) is an extension of the EPF scheme that allows an employee to voluntarily contribute more than the mandatory 12% of basic salary and DA towards their provident fund account. VPF contributions earn the same interest rate as regular EPF and are managed under the same EPFO account.

    Unlike EPF, VPF has no matching employer contribution — the employee can voluntarily contribute up to 100% of Basic + DA. Interest earned on VPF contributions is tax-free only up to ₹2.5 lakh per year (₹5 lakh if there is no employer contribution to PF); interest on contributions beyond this threshold is taxable.

    Key points

    • ✓ An employee-only voluntary top-up above the mandatory 12% EPF contribution
    • ✓ No matching employer contribution is required for the VPF portion
    • ✓ Earns the same interest rate as regular EPF, currently 8.25% (FY 2025-26)
    • ✓ Interest is tax-free only on contributions up to ₹2.5 lakh/year (₹5 lakh if no employer PF contribution)
    • ✓ Withdrawal rules and lock-in are the same as regular EPF

    Example

    An employee with a basic salary of ₹50,000 whose mandatory EPF contribution is ₹6,000 (12%) decides to additionally contribute ₹10,000/month as VPF, bringing their total monthly PF contribution to ₹16,000, all earning the same EPF interest rate.

    FAQ

    Frequently asked questions

    Is there a maximum limit for VPF contribution?
    An employee can contribute up to 100% of Basic + DA towards VPF, though interest earned beyond a combined PF+VPF contribution of ₹2.5 lakh/year (₹5 lakh if there's no employer contribution) becomes taxable.
    Does the employer match VPF contributions?
    No, VPF is entirely employee-funded; the employer's contribution remains fixed at the standard EPF/EPS split regardless of how much the employee opts to contribute voluntarily.
    Can I stop or change my VPF contribution anytime?
    VPF contribution is generally fixed for the financial year once opted, though most employers allow employees to revise or stop it at the start of a new financial year via a fresh declaration.

    Related terms

    EPF (Employees' Provident Fund)EPS (Employees' Pension Scheme)UAN (Universal Account Number)Basic Salary

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