Atal Pension Yojana Eligible for Income Tax
Benefits
INVESTORS CAN get NPS-like treatment; Additional
deduction of 50,000 under 80CCD
Contributions to the Atal Pension Yojana (APY)
will now be eligible for the same tax benefits as the National Pension System
(NPS), according to a circular released by the Income Tax department.
The tax benefits include the additional deduction
of Rs. 50,000 under section 80CCD(1) introduced in last year's Budget. The APY
is open to Indians aged between 18 and 40 years and has a minimum tenure of 20
years.
About 20 lakh subscribers have joined the scheme
since its launch in June 2015. The APY replaced the NPS Lite or / Swavalamban
scheme, which got about 45 lakh subscribers in the past six years.
The biggest draw of the APY is that the
government will contribute 50% of the contribution made by the investor for a
period of 5 years. But, this benefit will only go to subscrib ers who put in
less than Rs. 1,000 a year and those who join the scheme before March 31, 2016.
Those with taxable income are also not eligible.
Most subscribers to the APY are small-ticket
investors. Its AUM of Rs. 328 crore is spread across 19.77 lakh accounts, so
the average balance per account is only Rs. 1,640. In comparison, the NPS Lite,
which benefited from the market rally since 2010, has about Rs. 1,982 crore
lying in 44.63 lakh accounts, an average of Rs. 4,440 per account.
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