How to enable Voluntary Provident Fund (VPF) for employees

Modified on Thu, 21 Mar at 2:03 PM

The Voluntary Provident Fund or VPF is a retirement-savings scheme where an employee can choose to contribute an additional amount to their EPF account, apart from their regular PF contribution. Unlike the regular PF contribution, the employer is not required to contribute an equal amount to VPF. In this, employees can choose to contribute up to 100% of their Basic+Dearness Allowance.

Contributions to VPF are even eligible for tax deduction under Section 80C of the IT Act, 1961, up to a maximum of Rs. 1.5 Lakh. If an employee wishes to opt for VPF, the employer can enable it in the Keka system and declare the amounts on behalf of the employee, which can help them save taxes.

Let's see how to enable Voluntary Provident Fund (VPF) for employees.

Click on the Payroll (1) tab and proceed to Settings (2). Find Pay Groups (3) tab. If there are multiple pay groups, choose the one you want to work on. Under Actions, find the Configure Icon (4) and click on it.

Now go to Contributions (1) and click on the 3 dots to open the meun and choose Update PF Settings.

On the window that pops up after clicking Update PF Settings, find Additional Settings. Under it, check the box against 'Allow employees to contribute towards VPF'. Then, click Update.

Even though the settings say "Allow employees to contribute VPF", in Keka the Admin has to manually override the VPF amount for employees to deduct it from their monthly salaries which in turn reduces their net pay.

It is hoped that this document was found helpful. If you have any more questions, please go through the other articles. If need be, please talk to our product experts!