PF Online: As the equity market has been behaving erratically, people are looking towards the small saving schemes backed by the Government of India (GoI) to make some money. However, the GoI also has slashed interest rates on these small saving schemes. However, your Provident Fund (PF) will still fetch 8.5 per cent annual interest rate, which is much higher than the debt and tax-saving bank fixed deposits. But, the PF investment is fixed? So, how can a salaried person can invest more in PF and ensure guaranteed return with compounding benefits at the time of retirement? 

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According to tax and investment experts, employees can do this online by asking the EPFO to increase monthly PF contribution. This can be done offline as well at the time of annual appraisal by opting for Voluntary Provident Fund (VPF).

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Speaking on how VPF is beneficial for the salaried person Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "People do investments to get income tax benefit under Section 80C of the income tax act. However, for those who have lower risk-appetite, the investment tools available in the market would fetch much less annual interest rate than the VPF." 

Jhaveri said that to avail Section 80C of the Income Tax, where one is allowed to avail of income tax exemption on up to Rs 1.5 lakh investment in a financial year, people generally invest in PPF (Public Provident Fund), National Savings Certificate (NSC). But, for those who have lower risk appetite, PPF is the most preferred investment tool.

Suggesting VPF ahead of PPF or any other small saving scheme Manikaran Singhal, a SEBI registered tax and investment expert said, "Increasing monthly PF contribution is much better option than opening PPF or NSC account. By opting for the VPF, you ensured 1.4 per cent more returns on your money with same income tax benefits as PPF interest rate is now 7.1 per cent only while PF interest rate is 8.5 per cent. In NSC, interest rate has been slashed to 6.8 per cent." Singhal advised salaried individuals to put their money in PF using VPF option if the surplus money is for the tax-saving instruments. He said that it will make your calculations much easier at the time of Income Tax Return (ITR) filing as there will be one account falling under Section 80C category.

Jhaveri said that asking the recruiter is possible these days as it is annual appraisal time and recruiters will have no hesitation in enhancing your monthly PF contribution citing, "When you increase your monthly PF contribution beyond 12 per cent, your contributor need not to pay additional as the recruiter has to pay 12 per cent of your basic as per the EPFO (Employees' Provident Fund Organisation) rules." He said that by opting VPF, you get better guaranteed returns without the involvement of any risk factor.