Atal Pension Yojana or APY is a guaranteed pension scheme from government and it is administered by the Pension Fund Regulatory and Development Authority (PFRDA). Under Atal Pension Yojana, subscribers get a guaranteed minimum pension depending on their contributions. As of now, there are five slabs of pension, from Rs 1,000 to Rs 5,000 per month. Investment in the Atal Pension Yojana, a pension scheme mainly aimed at the unorganized sector, also qualifies for income tax benefits.
Currently, the pension regulator is conducting a feasibility study over raising the pension limit to Rs 10,000 per month under the Atal Pension Yojana. The feasibility study is expected to be completed next month. “We are doing an actuarial valuation of the portfolio that will show us whether the government really needs to do something to honour the guarantee or whether the guarantee will really not be required,” a report from Press Trust of India quoted PFRDA Chairman Hemant G Contractor as saying.
The subscriber base of the Atal Pension Yojana has already crossed the 1 crore mark.
Atal Pension Yojana income tax benefits and other details
1) Contributions to the Atal Pension Yojana are eligible for the same income tax benefits as the National Pension System or NPS.
1) Under Section 80CCD(1), investment in Atal Pension Yojana or NPS up to Rs 1.5 lakh qualifies for income tax deduction. But remember that the total amount of deduction under sections 80C, 80CCC and 80CCD cannot exceed Rs. 1.5 lakh. In addition, an investment up to Rs 50,000 in the Atal Pension Yojana or NPS is deductible from taxable income under Section 80CCD (1B) of the Income Tax Act, 1961.
2) Depending on the contribution of the subscriber, the Atal Pension Yojana (APY) gives a guaranteed minimum pension of Rs 1,000, Rs 2,000, Rs 3,000, Rs 4,000 or Rs 5,000 per month from the age of 60.
3) To join the Atal Pension Yojana, the subscriber’s age should be between 18 years and 40 years. The benefit of the Atal Pension Yojana is that the minimum pension is guaranteed by the government even if the returns from the sum invested by the subscriber over the period of contribution are less than the minimum guaranteed pension. A shortfall is funded by the government.
4) On the other hand, if the actual returns on the pension contributions are higher than the minimum guaranteed pension, the excess amount will be credited to the subscriber’s account.
5) Contributions to the Atal Pension Yojana can be made at monthly/quarterly/half yearly intervals through auto-debit facility from savings bank account/post office savings bank account of the subscriber.
6) The early you join the Atal Pension Yojana the lower monthly/quarterly/half yearly contribution you have to make for getting a fixed monthly pension. For example, subscribers joining at 18 years of age have to contribute Rs 42 and Rs 210 on a monthly basis to get a minimum guaranteed monthly pension of Rs 1,000 and Rs 5,000, respectively. Similarly, subscribers joining at 30 years of age have to contribute Rs 116 and Rs 577 on a monthly basis to get a minimum guaranteed monthly pension of Rs 1,000 and Rs 5,000, respectively.
7) A subscriber can open only one Atal Pension Yojana account. Multiple accounts are not permitted.
8) In case of death of the subscriber, the spouse will receive the pension and on the death of both (subscriber and spouse), the pension corpus will be returned to the nominee.
9) According to the PFRDA, exit from the Atal Pension Yojana before 60 years of age is permitted only in exceptional circumstances like death of beneficiary or terminal illness.
10) The government has amended the rules governing the Atal Pension Yojana to give an option to the spouse to continue to contribute for the balance period on premature death of the subscriber.
