The Atal Pension Yojana (APY) is a government-backed pension scheme that not only provides retirement security but also offers tax benefits to subscribers. Understanding the tax advantages can help maximize savings while planning for the future. This guide explains the tax benefits available under APY and how much you can save.

Tax Benefits Under Atal Pension Yojna: How Much Can You Save?

APY subscribers can avail tax benefits under the following sections of the Income Tax Act, 1961:

1. Deduction Under Section 80CCD(1)

• Contributions to APY qualify for deductions under Section 80CCD(1).
• The deduction is subject to a maximum limit of ₹1.5 lakh per year, including deductions under Section 80C.

2. Additional Deduction Under Section 80CCD(1B)

• Subscribers can claim an additional deduction of ₹50,000 per year under Section 80CCD(1B).
• This is over and above the ₹1.5 lakh limit under Section 80C, allowing total tax savings up to ₹2 lakh per year.

3. Tax-Free Returns at Maturity

• The pension amount received after 60 years is fully taxable as per the individual’s tax slab.
• However, the corpus amount given to the nominee in case of the subscriber’s demise is tax-free.

How Much Can You Save with APY?

Tax savings depend on your income bracket. Below is an estimate of potential savings:

Important Considerations

• APY is a long-term investment, and tax benefits apply only if contributions are made regularly.
• Premature withdrawal may affect tax benefits and lead to penalties.
• Only Indian citizens are eligible for tax benefits under APY.

Conclusion

Subscribing to Atal Pension Yojana offers dual benefits: retirement security and tax savings. By maximizing deductions under Section 80CCD(1) and 80CCD(1B), subscribers can save up to ₹60,000 annually based on their tax bracket.

Want to Save More on Taxes? Start contributing to APY today and claim tax benefits under Section 80CCD!