Kolkata: Voluntary Provident Fund, or VPF, is a voluntary savings/investment scheme for salaried individuals. More specifically, it is for the employees of the formal sector of the economy, who can ask their employer to deduct an amount of his/her choice every month from his/her salary and deposit it in the EPF account. The money that is routed through the VPF route will enjoy the same safety and income tax benefits that EPF investments enjoy.
However, there are provisions for early withdrawal of money from the VPF. But an employee cannot abruptly close a VPF account and take out all the money that has flowed in through the VPF route. In order to discourage indiscriminate withdrawals the EPFO (Employees Provident Fund Organisation) has erected a few obstacles so that free flow out does not happen. Let’s see what governs early withdrawal from VPF.
Can we withdraw a VPF amount anytime?
VPF has a lock-in period. The lock-in period of a VPF account is 5 years. Therefore, if an employee withdraws money from his/her account before the expiry of 5 years from the date of opening it, income tax will be levied on the withdrawal. The tax will be applicable not only on the principal deposited into the account but also on the interest earned. This is to build a disincentive into the system. According to rules, TDS under section 192A will also be deducted on any such transaction. If one meets with a situation, which is unforeseen and one needs to tap into the VPF, the rules allow him/her to do so under the following situations:
- Emergency medical treatment for self or family members such as parents, children or spouse
- Marriage of the employee or that of children
- Higher education expenses of the employee/children
- Buying plot of land or house or flat
How do I get my money from VPF?
One has to apply in EPF form 31 in order to withdraw money early from the fund. This form is available in the EPFO portal. Any EPFO subscriber can download this form after logging in with the help of the UAN and password. One can go to the “Online Services” menu and then select “Claim” to click on the online request. A new page will appear that will show personal details such as PAN, Aadhaar etc. One has to check this information and then click “Proceed for online claim”. From the next page one has to select the reason for the advance from the EPF. The desired amount has to be typed in. An OTP will be sent to the applicant which is based on the Aadhaar. The OTP has to be validated and to submit the claim form.
VPF, or Voluntary Provident Fund, is one of the safest ways of investing to create a post-retirement fund. An employee can take advantage of the fact that EPF (Employees Provident Fund) is one of safest guaranteed-return investment instruments for one’s post-retirement years and invest in VPF which is an extension of EPF. Though both EPF and VPF are essentially designed for building wealth in the long term, there are provisions for early withdrawal from VPF. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
