Voluntary Provident Fund (VPF)

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VPF Eligibility

Any employee who is already enrolled in the Employees’ Provident Fund (EPF) scheme is eligible to contribute to VPF. The employee must have:

• An active Universal Account Number (UAN)
• An existing EPF contribution

VPF contribution is completely voluntary and is initiated at the employee’s request.

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VPF Contribution Limits

Employees can contribute any percentage of their PF wages towards VPF with the following conditions:

• Minimum: 0% of PF wages
• Maximum: 88% of PF wages

There is no absolute maximum amount limit, but the percentage-based restriction applies. The declaration can be maximum of ₹5,903 (88% of PF wages) for employees whose PF is calculated on the standard ₹15,000 limit. The VPF contribution amount will be deducted from the employee’s monthly salary in addition to the regular EPF deduction.

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Tax Benefits of VPF

VPF offers excellent tax benefits under the Income Tax Act:

• VPF contributions qualify for tax exemption under Section 80C of the Income Tax Act in the old tax regime.
• VPF contributions are not tax-exempt under the new tax regime.
• The interest earned on VPF is tax-free up to certain limits.
• The maturity amount received is also tax-free under certain conditions.

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Setup VPF

Before employees can contribute to VPF, ensure that your organisation has properly set up the Provident Fund in RazorpayX Payroll. To enable VPF for your organisation: Once PF is properly set up, employees can opt in for VPF contributions.

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Manage VPF

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Opt In for VPF

Employees can opt in for VPF contributions through their dashboard or request HR/Admin to enable it. To enable VPF for an employee:

1. Log in to the Payroll Dashboard.
2. Navigate to People from the left menu.
3. Open the employee’s profile and navigate to their Compensation tab.
4. Click on the Deductions tab to view all deduction options.
5. Locate the Voluntary PF section and click Opt in to VPF.
6. In the Voluntary PF dialog box that appears:
   • Enter the Monthly Contribution amount the employee wishes to contribute.
   • Note the declaration can be maximum of 88% of PF wages.
   • Check the confirmation box.
7. Click Opt in to confirm.

The VPF contribution will be applied from the next salary cycle.

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Modify VPF Amount

Employees can request to modify their VPF contribution amount at any time. To modify the VPF amount:

1. Log in to the Payroll Dashboard.
2. Navigate to People from the left menu.
3. Open the employee’s profile and navigate to their Compensation tab.
4. Click on the Deductions tab to view all deduction options.
5. Locate the Voluntary PF section and click Manage VPF.
6. From the drop-down menu, select Modify VPF amount.
7. In the Modify VPF amount dialog box:
   • Enter the new Monthly Contribution amount.
   • Note the declaration can be maximum of 88% of PF wages.
   • Check the confirmation box if not already checked.
8. Click Modify to save the changes.

The modified VPF amount will be effective from the next salary cycle.

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Opt Out of VPF

Employees can choose to opt out of VPF contributions at any time. To opt out of VPF:

1. Log in to the Payroll Dashboard.
2. Navigate to People from the left menu.
3. Open the employee’s profile and navigate to their Compensation tab.
4. Click on the Deductions tab to view all deduction options.
5. Locate the Voluntary PF section and click Manage VPF.
6. From the drop-down menu, select Opt out of VPF.
7. Click Opt out to confirm or Cancel to go back. After opting out, the VPF contribution will stop from the next salary cycle.

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VPF Processing

Once VPF is enabled and the contribution amount is set:

• The specified VPF amount is deducted from the employee’s monthly salary, in addition to the regular EPF deduction.
• Both EPF and VPF contributions are processed together and remitted to the employee’s PF account.
• VPF contributions are visible in the employee’s payslip under the deductions section.
• The VPF amount is included in the ECR file generated for PF payments.

No separate payment process is required for VPF as it is processed along with the regular PF contributions.

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VPF in Tax Declarations

VPF contributions are automatically included in tax declarations under Section 80C for employees on the old tax regime:

1. The VPF amount is automatically added to the total EPF contribution for tax calculation purposes.
2. The combined EPF and VPF contributions are shown in the Form 16 under Section 80C deductions (for old tax regime only).

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Troubleshooting VPF Issues

Common VPF issues and their solutions:

1. VPF not showing in payslip:
   • Verify that the VPF opt-in was completed before the payroll processing date.
   • Check if the PF settings are properly configured for the organisation.
   • Ensure the employee has an active UAN and is enrolled in EPF.
2. Unable to modify VPF amount:
   • Check if there are any organisation-level restrictions on VPF modifications.
   • Verify that the requested amount is within the allowed limits (maximum 88% of PF wages).
   • Ensure the modification request was made before the payroll cut-off date for the month.
3. VPF not reflecting in tax declarations:
   • Verify that the employee is on the old tax regime where VPF tax benefits apply.
   • Check if the VPF contributions have been properly processed in previous payroll cycles.

If issues persist, Contact support for assistance.

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Related Information

• Provident Fund
• Statutory Compliance