The Central Government has issued a Notification in F. No. 16/1/2015-PR on 10.08.2022 to prescribe that an income-tax payer shall not be eligible to join Atal Pension Yojana from 1st October, 2022.
It further states that in case a subscriber, who joined on or after 1st 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.
Subscribers who have joined the APY before 1st October 2022 i.e. upto 30.09.2022 shall be eligible to contribute to the pension fund even though they are income-tax payer.
Further, it should be noted that the status of the subscriber will be determined at the time of joining the yojana. A subsequent change in the status to income-tax payer would not affect his eligibility to continue to the APY.
It is clarified that the expression “income-tax payer” shall mean a person who is liable to pay income-tax in accordance with the provisions of the Income-tax Act, 1961. However, the expression ‘liable to pay income-tax’ is not defined in the Income-tax Act. though the Income-tax Act defines the term ‘liable to tax’ but that is defined in the context of non-residents related to a foreign country.
It is clear that a person with gross total income (aggregate income under all the five heads of income) is less than the basic exemption limit of Rs. 2,50,000 (or Rs. 3,00,000 or Rs. 5,00,000 in the case of a senior citizen or very senior citizen) then he is not required to pay tax under the Income-tax Act. But whether a person, who has income in excess of Rs. 2,50,000 but lower than Rs. 5,00,000, in that case, he will be eligible to get a rebate under section 87A and thus his tax liability will be ‘Nil’, be called as an income tax payer to consider him ineligible for APY.
Further, it is also not clear if a person has saved payment of taxes by making investments in eligible securities or funds will he be called an income-tax payer.
Contribution to Atal Pension Yojana (APY) is eligible for deduction under section 80CCD(1) of the Income-tax Act, 1961 and is so notified by Notification No. 7 /2016 dated 09.02.2016 issued by the Central Board of Direct Taxes (CBDT).
Read the full text of the Notification dated 10.08.2022 on Income-tax Payers being ineligible to join APY
MINISTRY OF FINANCE
(Department of Financial Services)
NOTIFICATION
New Delhi, the 10th August, 2022
F. No. 16/1/2015-PR. —Atal Pension Yojana.— In partial modification of Ministry of Finance, Department of Financial Services Notification No. 16/1/2015-PR dated 16th October, 2015 on Atal Pension Yojana, published in the Gazette of India, Extraordinary, Part I, Section 1, the following amendment are hereby made:--
I. In the said notification at the end of para 2 the following shall be inserted, namely:-
“Provided that from 1st October,2022, any citizen who is or has been an income-tax payer, shall not be eligible to join APY.
Explanation: For the purpose of this clause, the expression “income-tax payer” shall mean a person who is liable to pay income-tax in accordance with the Income Tax Act, 1961, as amended from time to time.".
II. In the said notification, at the end of para 13, the following shall be inserted, namely:-
“In case a subscriber, who joined on or after 1st 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.”.
PANKAJ SHARMA, Jt. Secy.
Foot Note : The Original Notification was issued on 16th October, 2015 and was subsequently amended by Notification dated 19th January, 2016 and Notification dated 22nd March, 2016.
Download Notification dated 10.08.2022 on Income-tax Payers being ineligible to join APY in PDF format
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