EPF vs VPF vs PPF: Advisor breaks down the salary hack your HR didn’t tell you about

Most salaried Indians may be using their provident fund options wrong—and missing out on safer, higher returns, according to Chandralekha MR, Founder of Dime, who shared a crisp breakdown on LinkedIn that’s now making waves for its practical clarity.

Chandralekha recounts a real-life conversation with a friend working in the service sector who was considering opening a Public Provident Fund (PPF) account. Although he already had an Employee Provident Fund (EPF), he wondered whether splitting his savings between the two made sense.

Her advice? Skip PPF, and consider the Voluntary Provident Fund (VPF) instead—especially if you're salaried.

Here’s how she breaks it down:

1. EPF (Employee Provident Fund):

• Mandatory for salaried employees
• 12% of basic salary contributed by employee, matched by employer
• 8.25% tax-free interest
• One of the safest fixed-income instruments in India

2. VPF (Voluntary Provident Fund):

• Optional contribution over and above EPF
• Same 8.25% tax-free interest
• Tax-exempt up to ₹2.5 lakh contribution per year
• Only available to salaried individuals already enrolled in EPF

“Perfect for salaried employees,” says Chandralekha, because it builds directly on your existing EPF structure with no extra account maintenance.

3. PPF (Public Provident Fund):

• Open to all, including non-salaried individuals
• 7.1% tax-free interest
• Max contribution limited to ₹1.5 lakh per year
• Still a strong product, but not optimised for those already covered by EPF
• Best suited for self-employed or business professionals in the 30% tax bracket who lack EPF access.