VPF vs GPF: What's the difference between the two provident funds, and who can invest in which? Understand the benefits..

Whether you're in a government job or working in the private sector, a question must be coming to your mind: which is better, VPF or GPF (VPF vs GPF Comparison)? Both are provident funds, but their rules, interest rates, and investor categories differ. Let's understand the differences, interest rates, and return comparisons over 10-15 years.

What is VPF?
VPF, or Voluntary Provident Fund, is for private sector employees. It allows them to make additional contributions to their Employee Provident Fund (EPF) account. Typically, employees contribute up to 12% to EPF, but they can voluntarily contribute more to VPF. VPF earns the same interest rate as EPF, currently around 8.25%. This rate is set by the government and is slightly higher than GPF.

What is GPF? (What is GPF)
GPF, or General Provident Fund, is exclusively for government employees. Employees deposit a portion of their salary into the fund every month. This amount, along with interest, is received upon retirement.

The government has complete control over the GPF, and deposits are considered safe. The interest rate on GPF for the financial year 2025-26 is 7.1% per annum. The government sets this rate every three months, but it has remained roughly the same for the past several years.

Which pays higher interest?
Of the two, the VPF has an interest rate of 8.25%, while the GPF earns 7.1%. This means that the VPF is slightly more profitable in terms of interest.

10 and 15-Year Calculation (VPF vs. GPF Calculation)
If you deposit ₹10,000 every month:

You will accumulate ₹12,00,000 in GPF over 10 years. With 7.1% interest, this amount will become ₹17.2 lakh at maturity. This means you will earn a total profit of ₹5,20,000.

Depositing ₹12 lakh in VPF over 10 years will yield you ₹18,80,000 at maturity. This means you will earn ₹6,80,000. This amount is ₹1,60,000 more than GPF.

Depositing this amount for 15 years in GPF will yield you ₹31,60,000, while VPF will yield ₹35,80,000. Simply put, VPF offers higher returns than GPF.

Which is the better investment option?
If you're a government employee, GPF is already mandatory and secure. However, if you're in the private sector and want a long-term, tax-free, safe investment, VPF is the best option. Both offer secure returns, but VPF offers a slight advantage in terms of interest rates and tax benefits.

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