NPS Vatsalya Scheme 2025: Claim ₹50,000 Tax Deduction for Your Child's Future
In Budget 2025, Nirmala Sitharaman announced enhanced tax benefits under NPS Vatsalya Scheme, allowing up to ₹50,000 annual deductions under Section 80CCD(1B).
In Budget 2025, Union Finance Minister Nirmala Sitharaman announced enhanced tax benefits under the NPS Vatsalya Scheme, allowing parents/guardians to claim deductions of up to ₹50,000 annually under Section 80CCD(1B) of IT Act.
The NPS Vatsalya scheme was launched last year by the government to inculcate the habit of disciplined investments for children right from their early days. Under this, parents or guardians can open a retirement corpus for their child who is a minor by investing as low as ₹1,000 per month. There is no maximum limit.
NPS Vatsalya Scheme Overview
Feature | Details |
|---|---|
Eligibility | Parents or guardians can initiate an NPS account for their minor children who are below 18 years |
Minimum Contribution | ₹1,000 annually |
Maximum Contribution | No upper limit |
Tax Benefits | Additional deduction of ₹50,000 under Section 80CCD(1B) |
Administration | Regulated by the Pension Fund Regulatory and Development Authority (PFRDA) |
NPS Registration | Online via the eNPS platform by Protean |
Purpose | Promotes early retirement savings and long-term financial stability for minors |
Lock-in Period | Until the child turns 60 (early withdrawal permitted for specific circumstances) |
How to Open an NPS Account Online?
Parents and guardians can open the NPS Vatsalya Scheme for their children either online through the eNPS website or offline through Points of Presence (POPs) such as post offices, major banks, and Pension Funds.
The step-by-step process to open an NPS Vatsalya Scheme account online:
- Go to the eNPS official website
- On the homepage, under the "NPS Vatsalya (Minors)" section, find and click on the "Register Now" button
- Enter the date of birth, PAN number, mobile number and email address of the parent/guardian and click on "Begin Registration."
- An OTP will be sent to the registered mobile and email. Enter this OTP to verify.
- After OTP verification, an acknowledgement number will appear on the screen. Click "Continue".
- Please fill in the personal details of the minor and parent/guardian, upload scanned copies of identity/address proof documents, and click "Confirm."
- Make the initial contribution of ₹1,000 towards the NPS Vatsalya account
- Complete two-factor authentication using OTP/Aadhaar eSign
- A unique PRAN will be allotted, and the process of opening the NPS Vatsalya Scheme account in the name of the minor will be completed.
The online process for opening the NPS for children’s pension scheme is simple, paperless, and convenient. Parents can also visit the nearest POP for assisted registration.
New Tax Benefits in the Union Budget 2025
The revised NPS Vatsalya tax benefits allow parents to save ₹50,000 annually under Section 80CCD(1B), in addition to the ₹1.5 lakh limit under Section 80C. This dual deduction makes it a top tax-saving instrument for long-term wealth creation. It will provide substantial tax savings for parents and guardians who invest in this scheme for their children.
Elaborating on the NPS Vatsalya account opening process, the official said, "One can visit the eNPS portal and complete the online registration process by filling in details like name, date of birth of child, guardian's details etc. TheNPS Vatsalya Registration online is very quick and convenient".
Investment Choices Under NPS Vatsalya
The NPS Vatsalya Scheme offers flexibility for parents to choose the best fund options based on their investment goals.
Main Category | Sub- | Equity Exposure | Debt/Govt. Securities | Other Assets | Description |
|---|---|---|---|---|---|
Default Option | Moderate Lifecycle Fund | 50% | Balanced allocation | - | Default setting with 50% equity exposure. |
Auto-Choice Options | - | - | - | - | PFRDA-managed funds that adjust equity and debt ratios based on age. |
| Aggressive Fund | Up to 75% | Adjusted based on age | - | Higher equity allocation for growth-oriented investors. |
| Moderate Fund | Up to 50% | Adjusted based on age | - | Balanced approach with moderate risk exposure. |
| Conservative Fund | Up to 25% | Adjusted based on age | - | Lower equity exposure for risk-averse investors. |
Active Choice | - | Customisable | Customisable | Customisable | Parents or guardians can customise investments based on asset preferences. |
| Equity | Up to 75% | - | - | Higher return potential with market-linked growth. |
| Government Securities | - | 100% | - | Safe and stable returns with sovereign backing. |
| Corporate Bonds | - | 100% | - | Fixed-income investment with corporate exposure. |
| Alternate Assets | - | - | Up to 5% | Diversification with alternative investment options. |
This wide range of investment options allows parents to account for risk appetite, financial goals, and long-term planning, ensuring their child has a stable retirement corpus.
A Step Towards Financial Literacy and Security
The NPS Vatsalya scheme aims to instill in people the importance of retirement planning from an early age. By allowing parents to contribute to their children’s retirement funds, the government encourages disciplined saving habits and financial literacy among the younger generation.
Moreover, the flexibility in contributions—with no upper limit—ensures that families from various economic backgrounds can participate according to their capacity. This inclusivity is a key factor in the scheme's anticipated success.
Conclusion
With its flexible contributions, dual tax benefits, and long-term compounding gains, the NPS Vatsalya Scheme is ideal for securing your child’s future while reducing taxable income.
Parents and guardians passionate about education, long-term planning, and retirement savings for minors should take full advantage of this scheme. For account updates and contribution tracking, users can log into the Protean eNPS portal.
Note to readers: This article is part of HT's paid consumer connect initiative and is independently created by the brand. HT assumes no editorial responsibility for the content, including its accuracy, completeness, or any errors or omissions. Readers are advised to verify all information independently.
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