Income Taxpayers cannot join this govt scheme from October 1

By Team Newsable | First Published Aug 11, 2022, 8:11 PM IST

According to a notification issued by the Ministry of Finance, Department of Financial Services, "From October 1 2022, any citizen who is or has been an income-tax payer shall not be eligible to join APY"

The Central Government has altered the Atal Pension Yojana investment rules, banning income taxpayers from joining the scheme. From October 1, 2022, an income taxpayer will be ineligible to open an Atal Pension Yojana account under the revised rules. According to a notification issued by the Ministry of Finance, Department of Financial Services, "From October 1 2022, any citizen who is or has been an income-tax payer shall not be eligible to join APY [Atal Pension Yojana]."

If an income taxpayer joins the APY scheme on or after the specified date, their account is subject to closure.

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"For the purposes of this clause, the term "income-tax payer" shall mean a person who is required to pay income tax under the Income Tax Act of 1961, as amended from time to time," the notification added.

Previously, contributions to the Atal Pension Yojna were eligible for an income tax deduction of up to 50,000 under Section 80CCD (1B) of the Income Tax Act, in addition to the 1.5 lakh allowed under Section 80C.

The Atal Pension Yojna, announced in the 2015-16 budget, is a central government scheme that provides income security to individuals working in the unorganised sector after retirement. The scheme guarantees its subscribers a monthly pension ranging from Rs 1,000 to Rs 5,000 after reaching the age of 60, depending on their contribution. Contributions to APY can be made in three instalments: monthly, quarterly, and semi-annually.

The scheme requires a minimum investment age of 18 years and a maximum investment age of 40 years. Exits from the scheme are only permitted in exceptional circumstances, such as death or terminal disease.

In the event of the subscriber's death, the pension amount will be paid to their spouse. If both the subscriber and spouse die, the pension wealth accumulated up to the age of 60 is returned to the nominee.

The Pension Fund Regulatory and Development Authority (PFRDA) administers the Atal Pension Yojna via the National Pension System (NPS) architecture.

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