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The last date for filing income tax returns is gradually approaching. In such a situation, you should know many things from time to time, which will help in saving tax. For example, under Section 80C of the Income Tax Act, a rebate of up to Rs 1.5 lakh is available in the old tax regime on investing in LIC, Post Office, and other small savings. But do you know that the status of your PF account can make this benefit of yours disappear?

Yes, the money deducted from your salary as PF (Provident Fund) is deposited in the EPF (Employee Provident Fund) account. This money is also a part of your 80C limit, but the status of your EPF account decides whether you will get an 80C exemption on the contribution made in PF or not.

Who manages your money, EPFO or Trust?

In India, the PF money of the employees of every company doesn't need to be deposited by the Employees Provident Fund Organization (EPFO). There are many companies in the country that manage their own money through a trust. In such a situation, it is important to see whether your company's PF Trust has been kept in the category of 'exemption' available under 80C or not.

If your money is being deposited in a PF trust that falls in the 'exempt' category, then a salaried employee can claim income tax exemption on his contribution under Section 80C, whereas the employer's contribution is not taxable. What will happen if your company's PF Trust does not come under the 'exemption' category?

Your 80C exemption will disappear

Suppose the PF Trust of your company or employer does not come under the purview of income tax exemption, then what will happen? If money is deposited in such a trust, you do not get the benefit of exemption under Section 80C of the Income Tax Act on your contribution to EPF, and you have to pay tax on the PF contribution. However, you get full tax exemption on other savings made under 80C.

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