Voluntary Provident Fund

This query is : Resolved

BASNAIR (Querist)
Follow

12 May 2010 Dear Sirs,

I need the following clarifications (our company is less than 20 employees):

What is procedure of VPF?
How much contribute in VPF for employee?
Employer can contribute in VPF if yes how much?
VPF procedure is same as PPF?

Actually our Office is think about VPF. first
we think EPF but employees is less than 20. So good ideas is VPF suggested by my friend.

I am waiting your reply for registering VPF.

thanks

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
Follow

12 May 2010 There is no separte rules for Voluntary Provident fund, once you got the registration the same rules applicable as normal PF act

BASNAIR

BASNAIR (Querist)
Follow

15 May 2010 Pl tell me with details

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

03 August 2025 Here’s a detailed explanation about Voluntary Provident Fund (VPF) and how it applies, especially for companies with less than 20 employees:
What is Voluntary Provident Fund (VPF)?
VPF is an extension of the Employee Provident Fund (EPF) scheme where employees can voluntarily contribute more than the mandatory 12% of their salary towards their provident fund.
It is not a separate fund or scheme but a facility under the EPF Act to allow higher employee contributions.
Key Clarifications for Your Case (Company with less than 20 employees):
1. Applicability of EPF Act
The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 is applicable to establishments with 20 or more employees.
For companies with less than 20 employees, EPF registration is generally not mandatory but can be opted voluntarily under Section 1(3) of the EPF Act.
2. Registration for EPF/VPF
If your company has less than 20 employees and wants to offer EPF benefits voluntarily, you can apply for voluntary registration with the EPFO.
Once registered, the EPF and VPF provisions will apply to your employees.
Procedure for Voluntary Provident Fund
Employees can voluntarily contribute any amount over and above the statutory 12% of basic wages to their EPF account, called VPF.
There is no maximum limit for VPF contribution; employees can contribute up to 100% of their basic wages.
Employers are not required to contribute to VPF. Employer's contribution remains limited to 12% as per EPF rules.
How much can employees contribute?
Employees contribute mandatory 12% of basic wages (if EPF applicable).
On top of that, they can contribute any voluntary amount (VPF) beyond 12%.
Is VPF procedure same as PPF?
No. VPF is part of EPF scheme and contributions are managed by the EPFO.
PPF (Public Provident Fund) is a separate government-backed savings scheme with a fixed tenure and interest rates, managed by banks or post offices.
Summary Table:
Aspect Detail
Applicability EPF Act applies if ≥ 20 employees; voluntary registration allowed for <20
Employee Contribution Mandatory 12% of basic wages + voluntary amount (no upper limit)
Employer Contribution Mandatory 12% on basic wages; no contribution on VPF
Registration for VPF EPF registration required (voluntary for <20 employees)
Procedure Same as EPF; no separate VPF procedure
PPF vs VPF Different schemes; PPF is individual, VPF is employee voluntary EPF contribution
Next Steps for You:
Apply for voluntary EPF registration with the EPFO if you want to offer EPF/VPF benefits.
Inform employees about the option to contribute voluntarily through VPF.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now