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

The Indian government introduced the Atal stipend Yojana, which provides a retirement stipend after the age of 60, in the Union Budget 2015-16. This National Pension Scheme (NPS), named after former Indian Prime Minister late Atal Bihari Vajpayee, focuses on bringing workers aged 18 to 40 years under the cover of a pension scheme. The system provides a fixed pension ranging from Rs. 1,000 per month to Rs. 2,000 per month, Rs. 3,000 per month, Rs. 4,000 per month, and Rs. 5,000 per month. It is determined by your monthly contribution. The quantity of coverage and the age at which you begin the APY plan will determine your monthly contribution. In this post, we will look into the rules, perks, and characteristics of the Atal Pension Yojana. 

Atal Pension Yojana Rules 

To assist you in developing a thorough understanding, we have divided the Atal Pension Yojana guidelines into several areas, including eligibility criteria, age restriction, and account opening specifics, among others: 

Eligibility for APY  

If you are a citizen of India, between the ages of 18 and 40, and have a valid savings bank account linked to your Aadhar card and Pan card mobile number, you are eligible for Atal Pension Yojana benefits.

Individuals who are or have been income taxpayers will be ineligible to benefit from this plan as of October 1, 2022, according to a recent revision dated 10 August 2022 by the Department of Financial Services. Existing subscribers may continue to participate in the scheme; however, ineligible investors who joined on or after October 1 will be refunded.

APY account opening 

One of the primary Atal Pension Yojana guidelines that people frequently have questions about is the one about opening an account. The APY system is open to all citizens with verified bank accounts. They can donate to the initiative using an auto-debit facility. To avoid penalty costs, subscribers must keep the required balance in their savings bank accounts on the set due date.

The Aadhaar card is the key KYC document used to identify spouses, beneficiaries, and nominees. In the long run, this will prevent pension rights and entitlement-related issues. Contributions can be made on a monthly, quarterly, or semi-annual basis via auto-debit from a savings bank account or a post office savings account. After joining APY, each subscriber will be sent an acknowledgement slip that will invariably include the guaranteed pension amount, the due date of contribution payment, PRAN, and other information.

Pension Withdrawal

A subscriber shall be eligible to receive a monthly pension starting from the age of 60, as stipulated by the Atal Pension Yojana. Subsequent to the subscriber's demise prior to the scheme's maturity, regrettably, the benefits of the scheme shall pass to the subscriber's spouse. The registered designee will also inherit the invested corpus in the event that both the subscriber and their spouse pass away.

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Penalty for Delayed Contributions

If a subscriber is unable to contribute on a monthly basis, a penalty will be assessed beginning on the due date and continuing every day thereafter. The first day of the month or any other day in the calendar month can be utilized as the due date for each subscriber to recover the monthly contribution.

The monthly contribution will be refunded in addition to the monthly penalty amount. Banks or post offices will handle this process internally. The penalty will be recovered as soon as funds become available in the account.

Premature Withdrawal

When you reach the age of 60, the APY plan will mature. You would be eligible for a monthly pension after maturity.

In extraordinary circumstances, such as death or terminal illness, the spouse of a subscriber will have the option of continuing the existing account or receiving the corpus amount even before the term's maturity. The nominee would get the accrued pension funds if both the subscriber and spouse died. 

Features of the Atal Pension Scheme 

The following are some of the Atal Pension Scheme aspects that you should be aware of: 

Fixed pension

According to the provisions of the Atal Pension Yojana, this is a social security pension system that guarantees you a fixed pension after the age of 60. Based on your monthly membership, this sum is disbursed in the range of Rs. 1,000 per month, Rs. 2000 per month, Rs. 3000 per month, Rs. 4000 per month, and Rs. 5,000 per month. 

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:

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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

The Atal Pension Yojna also provides tax advantages. Section 80CCD of the Income Tax Act of 1961 applies to the Atal Pension Yojana (APY) tax benefit.

Please keep in mind that the maximum deduction allowed under Section 80CCD(1) of the Income Tax Act, 1961 is 10% of the subscriber's gross total income up to Rs. 1.5 lakhs. Furthermore, Section 80CCD(1B) of the Income Tax Act, 1961 provides for extra exemptions on contributions up to Rs. 50,000 every fiscal year.

Please keep in mind that APY subscribers who joined the plan before October 1, 2022, can continue to invest and benefit from the tax breaks. These deductions are subject to the requirements established in the Income Tax Act of 1961. Unexpected changes to tax laws occur. Readers are reminded to consult with their tax professionals before making any choices or acting in any way, as this is not legal nor tax advice.

APY PRAN number

The AYP PRAN is a unique 12-digit number assigned to APY program users. Please keep in mind that your NPS and APY PRANs will differ. PRAN information is given to your mobile number and, if applicable, your email address upon registration. This APY PRAN is available through this NSDL website. 

Takeaways

The Atal Pension Yojana is a noteworthy initiative by the Government of India, particularly for poor people who, due to the unorganized nature of their work, are not covered by insurance or pension. This can undoubtedly aid in the creation of a suitable pension corpus from tiny recurring contributions. It is preferable to enroll if you are eligible for the scheme. 

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