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Atal Pension Yojana – Objective, Eligibility & Tax Benefits

Written by - Akshatha Sajumon

February 7, 2022 7 minutes

Atal Pension Yojana (APY) is a Government sponsored pension scheme available to all citizens of India. The scheme mainly focuses on the unorganised sector in the country. APY comes under the administration of the Pension Fund Regulatory and Development Authority (PFRDA) within the umbrella of National Pension System (NPS).

What is Atal Pension Yojana?

The goal of the Atal Pension Yojana scheme is to give a sense of security to all Indian citizens such that they need not worry about any illness, accidents or diseases during old age. Apart from individuals belonging to the unorganised sector, employees working in the private sector or with an organization that does not provide pension benefits can also apply for the scheme.

The scheme guarantees a minimum monthly pension ranging between Rs.1,000 to Rs. 5,000 to the beneficiaries. Subscribers can choose a monthly pension of Rs. 1,000, Rs. 2,000, Rs. 3,000, Rs. 4,000 or Rs. 5.000, that starts post 60 years of age. The amount of pension that a beneficiary receives is linked to the age at which the individual joined APY and the monthly amount contributed.

Objective of the scheme

Atal Pension Yojana is aimed at:

  • Unorganized sector employees like househelps, gardeners, delivery folks, etc.
  • Provides a sense of security by protecting individuals against financial burden associated with accidents, illness, diseases, etc.

Eligibility criteria for availing Atal Pension Yojana

Some of the eligibility criteria to be met for availing the Atal Pension Yojana scheme are:

  • All Indian citizens in the age range of 18 to 40 years can enroll under APY for receiving pension post 60 years of age.
  • The individual enrolled to receive benefits of the scheme must ensure contribution for at least 20 years.
  • Individuals enrolled under Swavalamban Yojana will be automatically migrated to Atal Pension Scheme.
  • Individuals enrolling for the scheme should mandatorily have a bank account and the deposit amount is auto-debited periodically from it.

How to open an Atal Pension Yojana account?

Here are the steps to be followed for opening APY account:

  • Fill and submit the APY registration form at a local bank branch
  • Provide the applicant’s bank account number, Aadhaar No. and mobile number
  • The first contribution amount gets deducted from the linked bank account when an APY account is opened.
  • The bank will then issue acknowledgment No./PRAN No. to the applicant.
  • All future contributions are automatically deducted from the applicant’s bank account.

How to download the APY form?

The Atal Pension Yojana account opening form can be obtained from a nearby bank branch that is a participant in the scheme. The application form can also be downloaded from various websites, such as the Pension Fund Regulatory and Development Authority (PFRDA) Official Website. 

Alternatively, to avail the subscription form online, an applicant can check on various banking websites, including those of most major banks in India.

What are the contribution requirements in APY?

Some of the important points to note on contribution in APY account are:

  • Auto-debit mechanism – An investor must provide his/her savings bank account details, mobile number and authorization letter granting permission to the bank for automatic deduction of monthly contribution. 
  • Contribution can be made monthly, quarterly or half-yearly and the auto-debit instructions should be accordingly amended. 
  • Due date for future monthly contributions is based on the first date of contribution. For example, if an investor makes the first contribution on the 10th of January, the next due date will be 10th February and so on.
  • APY-linked bank accounts must be sufficiently funded to ensure that the standing instructions for scheduled money transfers to APY are successful.
  • Aadhaar card must be submitted as a primary KYC document to identify the subscriber, spouse, and nominee. 
  • Identification document is essential to avoid any future disputes of rights and entitlements of APY pension and corpus.

How to contribute to Atal Pension Yojana?

Contributions to Atal Pension Yojana have to be made by requesting an auto-debit from the bank. If there is no sufficient account balance for successful auto debit, a penalty is levied as follows:

  • If contribution per month is up to Rs. 100- penalty of Re. 1 is charged
  • If contribution per month is between Rs. 101 to 500, the penalty is Rs. 2
  • If contribution per month is between Rs. 501 to 1000, penal charges are Rs. 5
  • If the contribution per month is above Rs. 1,001, the penal charges are Rs. 10

Fees for maintenance of APY account

Here are the fees and charges applicable for APY account:

Intermediary Activity Relevant Charges
Point of Presence Registration  Rs.120 to 150 – depends on the number of subscribers
Annual Recurring Charges Rs. 100 per subscriber
Central Recordkeeping Agencies APY Account opening charges Rs. 15 per account
Annual account maintenance charges Rs. 40 per account
Custodian Annual investment maintenance fee 0.0075% for electronic  & 0.05% for physical segment of assets under management
Pension Fund Managers Investment maintenance Fee (per annum) 0.0102% of assets under management

How are the APY funds invested?

Since APY schemes offer guaranteed pension, the investment details matter less as compared to NPS. The returns from investment matter if the returns exceed the guaranteed pension amount. A higher pension amount or higher returns for nominees are available only in case of death of the subscriber. Here is how the APY funds are invested:

  • Government Securities – Min. 45% and max. 50%
  • Debt Securities and term deposits of banks – Min.35% and max. 45%
  • Equity and related instrument–Min. 5% and max. 15%
  • Asset-Backed Securities etc.–Max. 5 %
  • Money Market Instruments–Max. 5%

Benefits of APY

The Atal Pension Yojana comes with a wide range of benefits for subscribers. Here are some of the key benefits to be availed from this pension scheme:

  • Low risk retirement investment with benefits guaranteed by the Government of India.
  • Guaranteed pension of Rs. 1,000, Rs. 2000, Rs. 3000, Rs. 4000 or Rs. 5,000 depending on contributions made by the investor.
  • Tax benefits can be availed for contributions made in the scheme, as per Section 80CCD (1) of the Income Tax Act, 1961.
  • Indian residents, both self-employed or salaried, can easily subscribe to this scheme.
  • Those contributing to other private/government-backed pension schemes can also opt for APY.
  • Flexibility of upgrading or reducing pension amount as per subscriber’s preference.
  • Flexibility to subscribe for pension on a monthly, quarterly or half-yearly basis.
  • APY can be availed by both organized and unorganized sector workers.
  • Guaranteed benefits for spouse/nominee/next of kin as per applicable rules in case of the demise of the APY subscriber.

Tax benefits of APY

Atal Pension Yojana is a government sponsored pension scheme that offers tax exemption benefits of up to Rs. 1.5 lakhs annually under Section 80C of the Income Tax Act, 1961. APY investment also qualifies for additional benefit of up to Rs. 50,000 annually under Section 80CCD (1) of the Income Tax Act, 1961. 


Atal Pension Yojana comes as a financial planning saviour for individuals working in the unorganised sector. It allows investors to make affordable contributions and reap the benefits of the same through retirement pension. This scheme can be put to good use by all those who would like to put aside a certain portion of their income for retirement. 


  1. How can I withdraw from APY?

Withdrawal from APY can be made either upon attaining 60 years of age or due to death of the subscriber or under exceptional scenarios for those under 60 years of age.

  1. How can I find out the status of my contribution to APY?

The status of contributions to APY is intimated to the registered mobile number of the subscriber through periodical SMS alerts. 

  1. How many APY accounts can I open?

A subscriber can open only one APY account, and it is unique per subscriber.

  1. What happens if sufficient balance is not maintained in the savings bank account for APY contribution?

Non-maintenance of savings account balance for contribution to APY is considered as default. Additional amount is collected by banks for delayed payments. For example, Re. 1 per month is collected for every Rs. 100 of contribution. 

  1. Is there any option to increase or decrease the monthly APY contribution?

APY subscribers can decrease or increase contribution amount as per the available monthly pension options. However, this option can be exercised once in a year. 

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