What Is Atal Pension Yojana? Rules, Benefits, and Features

The Atal Pension Yojana, which guarantees a retirement pension after the age of 60 years, was introuduced by the Indian government in the Union Budget 2015-16. Named after former Indian Prime Minister late Atal Bihari Vajpayee, this National Pension Scheme (NPS) focuses on bringing workers in the age group of 18 to 40 years under the umbrella of a pension scheme. The scheme guarantees you a fixed pension ranging from a minimum of Rs. 1,000 per month, Rs. 2,000 per month, Rs. 3,000 per month, Rs. 4,000 per month, to a maximum of Rs. 5,000 per month. It depends on the monthly contribution you make. The monthly contribution will depend upon the amount of coverage and the age at which you start the APY scheme. In this article, we will understand the Atal Pension Yojana rules, benefits, and features. 

Atal Pension Yojana Rules 

To help you build a comprehensive understanding, we have classified the Atal Pension Yojana rules into different categories, such as eligibility criteria, age limit, and account opening specifics, among others: 

Eligibility for APY  

You can avail of Atal Pension Yojana benefits if you are a citizen of India and between the age of 18 and 40 years and have a valid savings bank account linked with your Aadhar card and Pan card mobile number.

A recent amendment dated 10 August  2022 by the Department of Financial Services states that individuals who are or have been income taxpayers would not be eligible to avail of the benefits of this scheme from October 1, 2022. Existing subscribers can continue with the scheme but ineligible investors who joined on or after October 1 will receive a refund.

APY account opening 

One of the basic Atal Pension Yojana rules that people often wonder about is the one regarding opening an account. All citizens with valid bank accounts are eligible to avail the APY scheme. They can avail an auto-debit facility to contribute toward the scheme. The subscribers must keep the relevant balance in their savings bank accounts on the predetermined due date to avoid any penalty fees.

Aadhaar card is a primary KYC document for the identification of spouse, beneficiaries, and nominees. This will avoid pension rights and entitlement-related disputes in the long term. The contributions can be made on monthly, quarterly, or half-yearly intervals through the auto-debit facility from the savings bank account or post office savings account. Each subscriber will be provided with an acknowledgement slip after joining APY, which would invariably record the guaranteed pension amount, the due date of contribution payment, PRAN, and other details.

Pension Withdrawal

According to the Atal Pension Yojana provisions, a subscriber will receive a monthly pension upon reaching the age of 60 years. Unfortunately, if a subscriber dies before the maturity of the scheme, the spouse will receive the benefits of the scheme. Furthermore, if a subscriber and the spouse of the subscriber die, the registered nominee will inherit the invested corpus.

Penalty for Delayed Contributions

If a subscriber is unable to contribute on a monthly basis, the penalty will be levied from the due date and every day thereafter. For each subscriber, the first day of the month or any other day in the calendar month can be used as the due date for the recovery of the monthly contribution.

The monthly contribution will be recovered along with the monthly penalty amount. This process will be carried out internally by banks or post offices. The penalty amount will be recovered as and when funds are available in the account.

Premature Withdrawal

The APY scheme will mature when you reach the age of 60 years. After maturity, you would be eligible for a monthly pension.

In certain exceptional scenarios such as death or terminal illness, the spouse of a subscriber will have a choice to continue the existing account or get the corpus amount even before the maturity of the term. After the death of both the subscriber and spouse, the nominee would get the accumulated pension wealth. 

Features of the Atal Pension Scheme 

The following are some of the features of the Atal Pension Scheme that you must be abreast of: 

Fixed pension

As per the Atal Pension Yojana rules, this is a social security pension scheme that guarantees you a fixed pension after you reach the age of 60. This monthly amount is disbursed in the range of a minimum of Rs. 1,000 per month,  Rs. 2000 per month, Rs. 3000 per month, Rs. 4000 per month, to the maximum of Rs.5,000 per month based on your monthly subscription. 

Periodic payments

Depending on the amount of monthly pension you choose and the age at which you start your pension scheme, you will receive a periodic monthly pension under this scheme.

The gist, however, is that there is a provision for a periodic payment after maturity, which gives you financial security. 

The below contribution chart will help you understand the matrix of your pension amount and age: 

Discontinued payments

In case you discontinue your payments towards the Scheme, the bank shall:

• After six months, freeze the account
• After 12 months, deactivate the account
• After 24 months, close the account 

APY tax benefit

Atal Pension Yojna offers you tax benefits as well. The Atal Pension Yojana (APY) tax benefit comes under Section 80CCD of the Income Tax Act, 1961.

Please note that 10% of the gross total income (of the subscriber) up to Rs. 1.5 Lakhs is the maximum deduction permitted under Section 80CCD(1) of the Income Tax Act, 1961. Furthermore, additional exemptions on contributions up to Rs. 50,000 per financial year are provided under Section 80CCD(1B) of the Income Tax Act, 1961.

Note: APY subscribers who had joined the scheme before October 1, 2022, can continue to invest and avail the tax benefits. These deductions are contingent upon meeting the requirements outlined in the Income Tax Act, 1961. There are unforeseen changes to tax laws. Readers are hereby urged to speak with their tax experts before making any decisions or acting in any way because this is not legal nor tax advice.

APY PRAN number

AYP PRAN is a unique 12-digit number allotted to subscribers of the APY scheme. Please note that your NPS PRAN and APY PRAN will be different. On registration, details of PRAN are sent to your mobile number and your email ID, if any. This APY PRAN can be applied from this NSDL link. 

Takeaways

The Atal Pension Yojana is a commendable initiative by the Government of India, especially for underprivileged workers outside the scope of insurance and pension due to the unorganised nature of their work. This can surely help create a reasonable pension corpus from small periodic contributions. If you are eligible for the scheme, it is best to get enrolled. 

Frequently Asked Questions