Additional Voluntary Contribution (AVC) is an extra amount contributed by an employee to their retirement or provident fund, over and above the mandatory contribution.

Simple Meaning:

It is extra savings for retirement that an employee chooses to pay voluntarily.

Example:

If the required provident fund contribution is 12% of salary, an employee may choose to contribute an additional 5% as AVC.

Purpose:

Increase retirement savings

Earn additional interest

Get possible tax benefits (as per tax laws)

In short, additional voluntary contribution is an optional extra payment made to build a larger retirement fund.