Atal Pension Yojana (APY) is a very useful pension scheme that is targeted at employees from the unorganised sector. It is a government-run pension scheme that is available to any Indian citizen with a bank account. It can be used by said persons to avail a fixed monthly pension of Rs 1,000 to Rs 5,000 according to the official pension regulatory website. At the end of the fiscal year 2017-2018 there were a total of 97.05 lakh subscribers to the scheme. It should be noted that the pension regulatory body had estimated the number to hit 1 crore within the same period. However, despite the shortcomings of the subscriber base, it still remains a reliable method to receive a pension, especially for those in the unorganised sector.
Eligibility:
While the Atal Pension Yojana scheme is targeted at he employees of the unorganised sector, any Indian citizen with a bank account can be eligible for it. They have to be between the ages of 18 to 40 years with a savings account with a bank or post office.
How Much Do You Need to Contribute to the Scheme?
If you are 18 years of age, you would need to put in a contribution of Rs 42 to Rs 210 every month. The higher your age, the higher the contribution amount will be. It also depends on the age at which you enrol for the scheme. Once registered and enrolled in the pension scheme, the funds will be automatically deducted from your savings account on a monthly basis via an auto-debit facility.
However, this auto-debit facility is completely optional. If you don’t opt for it, you may be liable to pay an overdue interest amount. The minimum period of contribution for the scheme is at least 20 years. You can also choose to contribute in different time frames. It can be done on a monthly basis or if you prefer a quarterly or even half-yearly basis.
Up to Rs 5,000 Monthly Pension
The minimum pension bracket under the Atal Pension Yojana Scheme is Rs 1,000 to Rs 5,000 per month, with a break up of Rs 1,000 progressions. You as the subscriber will get to choose what minimum pension amount you want and proceed accordingly. Whatever the pension amount you opt for, it will only be payable after you attain the age of 60 years old. However, there is an option for premature exit from the scheme. For doing so, it will need to be under exceptional circumstances such as an event of death or terminal illness.
Income Tax Benefits of the Atal Pension Yojana Scheme
The contributions made under this scheme enjoy the same benefits that one gets under the National Pension System (NPS) scheme. The contributions you make under this Atal Pension Yojana scheme can be availed under Section 80CCD (1B) of the Income Tax Act. The current limit for income tax deduction Section 80CCD (1B) is Rs 50,000. This goes well above the Rs 1.5 lakh allowed under Section 80C.
Why is this Scheme Beneficial
It stands to reasons that, given the target customer, i.e., informal sector employees, a minimum monthly pay-out of Rs 1,000 to Rs 5,000 would be a significant amount in the scope of the day-to-day expenses. It also has a minimal contribution amount compared to most other pension schemes. This makes it a stable and reliable source of pension for meeting one’s minimal monthly needs. Again, it also depends on how much you invest. The scheme also enjoys the same Income Tax benefits as the NPS, making it quite on-par with that in terms of benefits.
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