No more Atal Pension Yojana benefits for Income Taxpayers from October 1

Neethi V. Kannanth | Last updated: 16 August 2022

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Quick Summary

The Atal Pension Yojana (APY), launched in 2015, provides social security and guaranteed monthly pensions to workers in the unorganised sector and the underprivileged. However, from October 1, 2022, individuals who are or have been income taxpayers are no longer eligible to join the scheme. This change aims to ensure the benefits reach the intended beneficiaries and to prevent those who can afford private pension plans from using the scheme.

What is Atal Pension Yojana?

Atal Pension Yojana was implemented by the Government in the year 2015 to offer social security to the workers, mostly working in the unorganised sector. The scheme is meant to offer pension benefits to the poor and underprivileged who do not seek any income tax exemptions.

The scheme can be subscribed by people aged 18 to 40. Subscribers to the scheme would receive a guaranteed monthly pension ranging between Rs. 1000 to Rs. 5000 based on their contribution after attaining 60 years of age. Contributions to the scheme can be monthly, quarterly or half-yearly.

Atal Pension Yojana: No Benefits for Income Taxpayers from Oct 1

In case of death of a person who has subscribed to the scheme, the spouse will be eligible for receiving the pension. In case of death of both the persons, the corpus fund will be returned to the nominee.

While announcing the scheme in 2015, the centre had said it will co-contribute up to Rs 1,000/year if subscribers avail of the scheme by December 31, 2015. As on FY23, the centre has allocated Rs 1,546 crore for the scheme. The budgeted amount includes the government's co-contribution, funding support to PFRDA for payment of incentives to aggregators and promotional campaigns under APY.

Income Taxpayers can't join the Scheme from Oct 1

The notification released by the Government states that from 1st October, 2022 any citizen who is or has been a taxpayer shall not be eligible to join the Atal Pension Yojana. The notification further stated that in case a subscriber who has joined the scheme on or after 1st October, 2022 and is subsequently found to be an income tax payer on or before the date of application, the account in his name shall be closed and the amount accumulated in the account till the date of such closure shall be returned to the subscriber.

For the purpose of this clause, income tax payer shall be the person who is liable to pay income tax in accordance with the Income tax Act, 1961 as amended from time to time.

This is done to ensure that the targeted sector i.e the poor and underprivileged shall benefit from the scheme and to discourage those who can afford a pension plan from availing the scheme. As the government assures guaranteed returns through the scheme, a low interest rate regime in the future would increase its burden for gap funding, the curtailment of the scheme benefits to the poor and underprivileged would reduce such burden.

To ensure that only non-income tax person subscribe to the scheme, the person subscribing to the scheme is required to make a declaration whether he is paying income tax or not. This would help in finding out whether income tax payers use the scheme in the future. More checks shall also be put in place in the future is what the centre said.

FAQ :

The Atal Pension Yojana is a government scheme implemented in 2015 to provide social security and guaranteed monthly pension benefits to workers, primarily in the unorganised sector, and the poor and underprivileged.

Individuals aged between 18 and 40 years who are not income taxpayers are eligible to join the Atal Pension Yojana.

The new rule stating that income taxpayers are not eligible to join the Atal Pension Yojana came into effect from October 1, 2022.

If a subscriber who joined on or after October 1, 2022, is subsequently found to be an income taxpayer, their account will be closed, and the accumulated amount will be returned to them.

This measure is in place to ensure that the scheme's benefits are directed towards the poor and underprivileged and to discourage individuals who can afford their own pension plans from utilising the scheme.