NPS Vatsalya scheme: Finance Minister Nirmala Sitharman on Saturday proposed tax exemption for contribution up to Rs 50,000 per year under the NPS Vatsalya Scheme, the children's welfare scheme launched on 18 September 2024. The move is aimed at making the scheme more attractive.
"I am also proposing to allow similar treatment to NPS Vatsalya accounts as is available to normal NPS accounts, subject to overall limits," she said while presenting Budget 2025-26 in Lok Sabha.
However, the tax benefit would be availed by those who opt for old tax regime.
“It is proposed to extend the tax benefits available to the National Pension Scheme (NPS) under sub-section (1B) of section 80CCD of the Income-tax Act, 1961 to the contributions made to the NPS Vatsalya accounts, as applicable,” she said.
A total of 89,475 subscribers have joined the scheme with Assets Under Management (AUM) of 61.98 crore. The enrolments under the Scheme would further increase with the tax exemptions allowed in the Budget.
Parents can subscribe to NPS Vatsalya online or visiting a bank or post office. The minimum contribution to open Vatsalya account is Rs 1,000.
Subscribers will have to contribute Rs 1,000 annually thereafter.
Under the NPS Vatsalya scheme, all minor citizens up to the age of 18 are eligible to open an account.
The account is opened in the name of the minor and managed by their guardian until the child reaches adulthood, ensuring that the minor remains the sole beneficiary throughout the process.
Upon reaching adulthood, the account can be seamlessly converted into a regular NPS account or another non-NPS scheme.
With the promise of substantial wealth accumulation through the power of compounding, NPS Vatsalya envisions providing a dignified and secure financial future for its subscribers, aligning with the government’s commitment to comprehensive financial well-being.
With PTI inputs