Exempted or Not???

Yes. Tax benefit under Sec. 80 CCD for the contributions made

It is under 80CCD, having max cap of 50K PA

Atal Pension Yojana Tax Exemption

Updated on 23rd Feb 2016

Initially there was no tax exemption on the premium amount paid in Atal Pension Yojana scheme. But a recent circular from Income tax department says that APY would have same benefits as NPS this means that premium amount paid can be claimed under section 80CCD. Current Limit for 80CCD tax exemption is rs 50 thousand.

Refer: atalpensionyojana/tax-benefits