Income tax payers will soon be disallowed to be a part of the Atal Pension Yojana (APY). According to a gazette notification issued by the Ministry of Finance, "Any citizen who is or has been an income-tax payer, shall not be eligible to join APY." The rule will come into effect on 1 October 2022.
The notification has also clarified that an 'income tax-payer' is a person who is "liable to pay income-tax in accordance with the Income Tax Act, 1961, as amended from time to time."
The notification further said that those who are already participating in the scheme will cease to be a part of it from 1st October. However, they will receive the money accumulated in their respective accounts.
“In case a subscriber, who joined on or after 1 October, 2022, is subsequently found to have been an income-tax payer on or before the date of application, the APY account shall be closed and the accumulated pension wealth till date would be given to the subscriber," the ministry said.
The scheme was announced by the government in Budget 2015. Under the scheme, a minimum monthly pension ranging between Rs1,000 and Rs5,000 per month is given to the subscribers. They must join and contribute to the scheme between the age of 18 and 40.
The APS brochure states the reason for starting the scheme as, "To address the longevity risks among the workers in unorganized sector and to encourage the workers in unorganized sector to voluntarily save for their retirement."
Also, it is administered by the Pension Fund Regulatory and Development Authority (PFRDA) in India. As of 4th June, National Pension Scheme (NPS) and APY have over 53 million subscribers, combined. Also, the Assets Under Management (AUM) under the two schemes was above Rs 7 trillion.