Time to raise your contribution to EPF?

With the rate rising to 8.75 per cent, the product will give better tax-free returns

The rise in the interest rate for the current financial year may not be available the next, as the overall interest rates are expected to come down. The rates are a factor of market conditions and will not remain at these levels the next year, says certified financial planner Gaurav Mashruwala.

Most financial planners also recommend that even if the EPF deductions from your salary make up for Rs 1 lakh (the exemption allowed under Section 80 C), it is advisable to continue investing in PPF. "If it fits in my financial goals, I will continue to have both EPF and PPF, even if the latter does not give me the benefit of tax exemption, because it is giving me 8.7 per cent in the long term and that too tax-free,'' Mashruwala says. In November, the government had capped the contribution employees can make towards the pension component of the EPF. This means at the time of retirement, more money will be available to the employee in the form of provident fund.