According to a circular released by the Income Tax Department, the contributions that have been made to the Atal Pension Yojana (APY) will now be eligible for the tax benefit, similar to the National Pension System.
- The tax benefit will be the additional deduction of Rs. 50,000/- under Section 80CCD(1) that was introduced into 2015’s budget. The pension yojana is for the Indian people aged between 18 and 40 years. The minimum period is of 20 years. According to government statistics, around 20 lakhs people have so far joined the yojana since June last year.
- However, the major attraction of the APY is that here the government will pay 50% of the contribution an investor has made for at least 5 years. But those people, who have contributed less than Rs. 1,000 in a year and have joined the scheme before 31st March, 2016 are entitled for this special benefit from the government. However, people with taxable income are not eligible.
- Mostly, the people who have joined the yojana are small-ticket investors. The budget of Rs. 328 crore is spread across 19.77 lakh accounts throughout the country. So the average balance in an account is around Rs. 1,640.