Big change in Atal Pension Yojana for taxpayers from October 1: Here’s how new rule will impact your savings

If a subscriber – who is also a tax paying citizen – wishes to join Atal Pension Yojana (APY) scheme, September 30 is the last date to do so. Find out why.

New Delhi: Income taxpayers cannot apply for the Atal Pension Yojana (APY) scheme from October onwards. The new order issued by Finance Ministry will come into effect from October 1, 2022 that has decided to bar tax payers from joining the APY after October 1. 

Hence, if a subscriber – who is also a tax paying citizen – wishes to join Atal Pension Yojana (APY) scheme, September 30 is the last date to do so. 

Here are 10 points you want to know before joining Atal Pension Yojana before October 1, 2022

- According to the gazette notification issued by the Ministry of Finance on August 10, any citizen who is or has been an income tax payer according to the Income Tax Act will not be eligible to join the Atal Pension Yojana from October 1, 2022.

- If someone has joined the scheme on or after October 1 and is found to be an income tax payer on or before the date of coming into force of the new rule, his/her account will be closed immediately.

- However the pension amount or the accumulated pension wealth that has been deposited till that time will be refunded in one go.

- Launched on May 9, 2015 by Prime Minister Narendra Modi, the APY aims at delivering old age income security particularly to the workers in the unorganised sector.

- APY can be subscribed by any Indian citizen in the age group of 18-40 years having a bank account. APY is a government scheme administered by PFRDA through NPS architecture. 

- The minimum age of joining APY is 18 years and maximum age is 40 years. Therefore, minimum period of contribution by the subscriber under APY would be 20 years or more.

- First, it provides a minimum guaranteed pension ranging from Rs 1000 to Rs 5000 on attaining 60 years of age. Secondly the amount of pension is guaranteed for lifetime to spouse on death of the subscriber. Third, in the event of death of both the subscriber and the spouse, entire pension corpus is paid to the nominee.

- APY has pre-defined monthly contributions. Under the APY, the subscribers would receive the fixed pension of Rs. 1000 per month, Rs. 2000 per month, Rs. 3000 per month, Rs. 4000 per month, Rs. 5000 per month, at the age of 60 years, depending on their contributions, which itself would vary on the age of joining the APY.

- Under APY, the Central Government would co-contribute 50 percent of the subscriber’s contribution or Rs 1000 per annum (whichever is lower) to each eligible subscriber account, for a period of 5 years, i.e., from 2015-16 to 2019-20, who join the NPS before 31st December, 2015.

- APY subscribers would enjoy tax benefits on their own contributions as well as their employer’s contribution under Section 80 CCD and 80 CCE.