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Tax Planning through savings and investments

Atal Pension Yojana

Aimed at the unorganized sector, Atal Pension Yojana was launched with a goal to provide protection to every Indian citizen during illness, accidents, diseases in old age and give them a sense of security. 


The private sector does not provide its employees with certain benefits such as a pension. Hence, Atal Pension Yojana aims to mitigate that risk. 


Each individual investing in Atal Pension Yojana has to contribute a certain amount to the fund every year. The contribution amount depends on the age at which one starts contributing as well as the amount of pension he/she wants to receive when they retire. 


The table below shows the contribution amount as per age and desired pension to be received:



You can access the full list by clicking on the source link


The Government also makes a co-contribution of 50% of the total contribution or ₹1000 per annum, whichever is lower to all eligible subscribers who had joined the scheme between June to December 2015 for a period of 5-years. However, to receive this government contribution, the subscribers should not be a part of any other statutory social security schemes such as EPF or should not be paying income taxes.


Atal Pension Yojana provides a fixed pension of ₹1000, ₹2000, ₹3000, ₹4000, ₹5000 once individuals reach the age of 60. The amount of pension is dependent on the individual’s age and contribution amount. 


If the contributor passes away, the contributor’s spouse can claim the pension. However, if the contributor passes away before attaining the age of 60 then the spouse is provided with an option to either exit the scheme and withdraw the corpus or continue the scheme for the balance period. 


Like the national pension scheme, the fund collected under this scheme is managed by the Pension Funds Regulatory Authority of India (PFRDA)


Important things to know about Atal Pension Yojana

  • Since the contribution is made periodically, the amount is deducted automatically from the bank account. 
  • The premium can be increased or decreased at your will. This can be done by contacting the bank through which you have signed up for the scheme. 
  • In case of default in payment, a penalty is levied at the rate of ₹ 1 per month for a contribution of every ₹100 or part thereof.
  • In case of default for consecutive 6 months, the account will be frozen. If the default continues for 12 months, then the account will be closed and the remaining amount paid to the subscriber. 
  • Premature withdrawal is allowed only in cases of death or terminal illness. In such cases, the subscriber or his/her nominee will receive the entire amount back. 
  • In case the scheme is closed by the subscriber before he/she turns the age of 60, only their contribution and interest earned on that sum will be returned. The depositor will not be eligible to receive any government contribution or interest earned on that amount. 

Atal Pension Yojana is one of the best-performing pension funds available in India. In 2019-2020, the fund has given over 11% return, much higher than all its counterparts.


How to apply for Atal Pension Yojana?

Almost all banks in India offer this scheme. You can visit your bank and apply for the scheme. Forms are available in English, Hindi, Bangla, Gujarati, Kannada, Marathi, Odia, Tamil, and Telugu.


Tax benefits for Atal Pension Yojana:

The contributions made by you into the Atal Pension Yojana are eligible for tax deductions under section 80CCD. Under section 80CCD (1) a total of ₹150,000 is eligible for a tax deduction. Additional ₹50,000 can be claimed under section 80 CCD (1b). 

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Units 10/15