S Vasudevan, executive partner, Lakshmikumaran and Sreedharan Attorneys says, “The notification dated August 10, 2022 provides that income tax payers cannot subscribe to Atal Pension Yojana with effect from October 1, 2022. The APY scheme seeks to restrict entry only. of income-tax payers from October 2022. Hence, APY subscribers who had joined the scheme before October 1, 2022, can continue to invest and get tax benefits. They are eligible for deduction under section 80CCD(1) of the Income Tax Act. , 1961, for the contribution made by him.”
Suresh Surana, Founder, Tax Consulting Group RSM India says: “It is noteworthy that the notification dated August 10, 2022, does not provide clarity about the income tax implications for contributions made to the APY scheme before October 1, 2022. or after.”
They say that investors who contributed to APY before October 1, 2022 will be eligible for deduction under section 80CCD(1). However, a clarification from the government in this regard would be greatly appreciated, says Surana.
Income tax benefit on Atal Pension Yojana was notified by the government on February 19, 2016. Those investing in APY were made eligible to receive the same income tax benefits as subscribers of the National Pension System – any notified scheme – receive. It is important to note that the maximum deduction under section 80CCD(1) and section 80C is limited to Rs 1.5 lakh in a financial year. So if you have exhausted the limit under section 80C by investing in Employees Provident Fund, Public Provident Fund, ELSS Mutual Fund, Life Insurance Premium or others, you will not be able to claim deduction for APY investment.
What is Atal Pension Yojana and who can invest in it?
Atal Pension Yojana was launched by the government on 1st June 2015 to provide social security to all Indians. The minimum age to join the scheme is 18 years and maximum is 40 years. A subscriber will receive a fixed pension from the age of 60 years. An individual can opt for any of the following pension amounts:
a) Rs 1,000 per month
b) Rs 2,000 per month
c) Rs 3,000 per month
d) Rs.4,000 per month
e) Rs.5,000 per month
Contribution to APY can be made on monthly, quarterly or half-yearly basis. The amount of contribution will depend on the pension amount chosen and the age of the individual. The sooner a person starts investing in this scheme, the lesser is the contribution amount.
For example, a person starts investing in pension scheme From the age of 18, a monthly contribution of Rs 210 has to be made for a monthly pension of Rs 5,000. On the other hand, a person who starts investing at the age of 40 will have to make a monthly contribution of Rs 1,454. Note that the investment has to be continued till the age of 60 years. Therefore, the minimum investment period is 20 years and the maximum is 42 years.