Will Your Atal Pension Yojana Contributions Get Income Tax Deduction After Oct 1?

Profile image

By Anshul   IST (Published)


Taxpayers will not be eligible to invest in Atal Pension Yojana (APY) from October 1. Here’s what it means for you

The government has restricted income taxpayers from investing in Atal Pension Yojana (APY) or Atal Pension Scheme (APS) from October 1, 2022. As a result, if a subscriber, who joined on or after October 1, 2022, subsequently becomes an income tax payer and the APY account will be closed and the accumulated pension wealth to date will be handed over to the subscriber.

However, now, the question arises  whether or not, an existing APY investor can continue to claim income tax deduction on the investments made in the scheme.

Commenting on the same, Adhil Shetty, CEO at BankBazaar.com said that the notification does not have any details on income tax implications for the contribution made to the APY scheme.

“So, until it is applied retrospectively, existing subscribers should be able to continue to invest and avail tax benefits,” Shetty told CNBC-TV18.com.

Maximum deduction allowed under section 80CCD (1) of the Income Tax Act, 1961 is 10 percent of gross total income subject to maximum deduction of Rs 1.5 lakh. An additional contribution of Rs 50,000 is eligible under section 80CCD (1B) of the Income Tax Act, 1961.

However, as APY focuses primarily on those working in the unorganised sector. For those in the taxable bracket, Shetty said that the National Pension System (NPS) continues to be an attractive option.

Under APY, an investor will receive a minimum guaranteed pension of Rs 1,000 to Rs 5,000 per month from the age of 60 years, depending upon his/her contribution.

The same pension would be paid to the subscriber’s spouse after the subscriber’s demise, and on the demise of both the subscriber and spouse, the pension wealth accumulated until age 60 of the subscriber would be returned to the nominee.

The contribution to the scheme can be made monthly/quarterly/half yearly basis. In case of death of the person, the spouse will receive the pension; on the death of both, the pension corpus will be returned to the nominee.

Source link

Leave a Comment