Finance Minister Nirmala Sitharaman, in the Union Budget 2025, announced enhanced tax benefits under the NPS Vatsalya Scheme. Parents and guardians can now claim deductions of up to ₹50,000 annually under Section 80CCD(1B) of the Income Tax Act, making long-term savings for minors more rewarding.
Siba Sanyena from AssetPlus commented, “With over 5 lakh accounts already opened and a projected 20% increase in enrollments this year, the NPS Vatsalya Scheme is proving to be a game-changer in securing children’s financial futures. The added tax benefits will only accelerate its adoption.” She further noted, “From a market return perspective, the NPS offers exposure to a mix of equity and debt, providing a balanced approach for long-term capital appreciation. This ensures that even small, consistent contributions can lead to substantial corpus accumulation over time.”
NPS Vatsalya: Securing Children’s Financial Future
Launched last year, the NPS Vatsalya Scheme promotes early investment habits by allowing parents to create a retirement fund for their minor children. The scheme requires a minimum investment of just ₹1,000 per month, with no upper limit, making it accessible to families of varying financial backgrounds.
Promoting Financial Literacy and Stability
The NPS Vatsalya Scheme is more than just a savings plan—it instills financial literacy and discipline from an early age. By encouraging parents to invest in their children’s future, the government aims to build long-term financial security.
Siba Sanyena highlights key benefits of the scheme:
Long-term Wealth Creation: Early investments maximize the power of compounding.
Market-Linked Growth: The scheme’s combination of equity and debt investments allows for stable and inflation-beating returns.
Tax Efficiency: Dual tax benefits make it a financially sound choice.
Flexibility in Contributions: No upper limit allows families to invest per their capacity.
Retirement Awareness: Cultivates lifelong financial planning habits.
Conclusion
With its enhanced tax benefits, flexible contributions, and market-linked growth potential, the NPS Vatsalya Scheme is an excellent opportunity for parents to secure their child’s financial future while reducing taxable income. Account updates and contribution tracking are available via the Protean eNPS portal.