Atal Pension Yojana: Scheme, eligibility, pension payout, tax benefits of APY, explained

Administered by the Pension Fund Regulatory and Development Authority (PFRDA), the Atal Pension Yojana is a government initiative that seeks to create a universal social security system for all Indians.

Announced by then Finance Minister Arun Jaitley in 2015, it runs under the overall National Pension System (NPS) architecture and aims to provide pension cover for the poor, underprivileged, and unorganised sector workers.

Who is eligible to apply for Atal Pension Yojana?

• The scheme is open to all Indian citizens between 18-40 years of age.
• Since October 2022, Indians who pay income tax are deemed ineligible.
• You must have an Aadhaar-linked bank account and valid mobile number.

• You must commit to making contributions for at least 20 years.
• Since it replaced the erstwhile Swavalamban Yojana, all previous beneficiaries were automatically migrated to APY.

Here's how to apply for Atal Pension Yojana: Stepwise guide

• To open an Atal Pension Yojana account online, you will have to check if your bank's allows registration via netbanking facility.
• If it does, search for APY on the bank's website and register for the scheme using the auto-debit facility.
• For offline, you can visit your bank or post office for the APY form and fill in the required fields.
• You will need to submit a copy of your Aadhaar card along with the form.

• Submit the filled form and KYC at the bank or post office where you have an account.
• The bank will give you an acknowledgement receipt for the form.
• Once your application is approved, you will receive a confirmation message on your registered mobile number.

APY: What are the contribution amounts?

The contributions differ, based on pension amount chosen and subscribers receive a guaranteed minimum monthly pension of ₹1,000, ₹2,000, ₹3,000, ₹4,000, or ₹5,000 after the age of 60 years, based on the inputs made.

Notably, the contribution amounts are automatically debited from your linked bank account, and you will need to make sufficient balance to ensure the payment is completed.

A subscriber must contribute ₹42 to ₹210 per month if joining at age 18, or ₹291 to ₹1,454 per month if joining at age 40. Payment of premium can be made on monthly, quarterly or half-yearly basis.

Defaulting on the payments leads to small penalties being cut by the bank as follows: ₹1/month for contribution up to ₹100/month; ₹2/month for contribution between ₹101-500/month; ₹5/month for contribution between ₹501-10,00/month, and ₹10/month for contribution beyond ₹1,001/month.

According to a Clear Tax report, your account is frozen if you default on six months payments, and deactivated if you remain in default for 12 months (one year). The account is closed if you fail to make payments for 24 months (two years), with the remaining amount paid to the subscriber, it added.

Payout of Atal Pension Yojana: Details

• Subscribers will receive guaranteed minimum monthly pension payout of one of the following sums: ₹1,000, ₹2,000, ₹3,000, ₹4,000, or ₹5,000 after the age of 60 years, based on the contributions made by the subscriber after joining the scheme.
• The pension payout is aimed at providing financial security and covering future exigencies for Indians in the unorganised sector.
• The monthly pension is available to the subscriber, and in case of untimely death to the subscriber's spouse.

• In case of death the accumulated pension corpus will be returned to the nominee at the subscriber's age 60.
• The report added that early withdrawal is only allowed in case of terminal illness or death, where the subscriber or nominee receives the entire amount.
• In case the account is closed before you reach 60 years of age, only subscriber's contribution plus interest earned is paid. You will lose the government’s co-contribution or the interest earned on that amount.

Tax benefits of Atal Pension Yojana

The scheme provides tax exemption on contributions made by individuals under Section 80CCD of the Income Tax Act, 1961 for up to ₹1,50,000.

Additional exemption of ₹50,000 for contributions to the APY can be claimed under Section 80CCD(1B).

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