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Nirmala Sitharaman, the finance minister of India, announced in the Union Budget 2025 a tax benefit for parents and guardians who are contributing to the NPS Vatsalya scheme.
NPS Vatsalya Tax Benefits
NPS Vatsalya Tax Benefits: Securing the future of their children is a top priority for parents. The continuous rising cost of education has forced parents and guardians to begin saving for their child’s future from the very beginning. It will help to build a good corpus once their child reaches the age of 18 or above.
But NPS Vatsalya has another added advantage now. It also provides tax benefits in the Income Tax returns to parents and guardians.
What Is NPS Vatsalya Scheme?
The Indian government last year launched the revolutionary and innovative NPS Vatsalya scheme to secure their children’s future by helping to build a disciplined saving habit. This saving-cum-pension scheme is being regulated and administered by the Pension Fund Regulatory Authority of India (PFRDA).
he National Pension System Vatsalya (NPS Vatsalya) is a contributary scheme that allows parents to save money for their minor children until they reach the age of 18.
Under the NPS Vatsalya scheme, parents can invest a minimum of Rs 1,000 per month with no upper limit. It helps parents to develop a habit of disciplined savings for their children so the money can be utilized for their education in the future.
How Will It Help In Tax Benefits To Parents And Guardian?
Nirmala Sitharaman, the finance minister of India, announced in the Union Budget 2025 a tax benefit for parents and guardians who are contributing to the NPS Vatsalya scheme. The benefit will be available under the old tax regime.
Parents and guardians can claim a tax benefit of up to Rs 50,000 under Section 80CCD (1B) of the Income-Tax Act, 1961, on contributions made to their minor child’s NPS Vatsalya account.
Previously, this tax benefit was available to those who are contributing to NPS Tier-1 accounts.
How To Open NPS Vatsalya Account For Your Child:
You can easily open an NPS Vatsalya account for your minor children via a seamless and quick online process.
The online platform (eNPS) is the easiest and quickest way to open an NPS Vatsalya account.
Step 1: Go to the official website – https://npstrust.org.in/open-nps-vatsalya.
Step 2: You can choose among three CRAs for NPS Vatsalya – Protean, Kfintech, and CAMS.
Step 3: Suppose you click on the CAMS new page, you will be sent to a new tab to commence the registration process.
Step 4: Enter all the details under NPS Vatsalya (Minor) including name, DOB, guardian name, guardian PAN, guardian DOB, guardian email ID, and guardian mobile number.
Step 5: Click on open NPS Vatsalya account tab at the bottom after filling all bars to complete the registration.
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.
