NPS Vatsalya Scheme: Tax Benefits & Retirement Planning for Children in FY 2025-26
Introduced in 2024 and enhanced in Budget 2025, NPS Vatsalya allows parents/guardians to open NPS accounts for minors (up to age 18). Contributions now qualify for an additional ₹50,000 deduction under Section 80CCD(1B) in the old regime (over and above ₹1.5 lakh under 80C). On maturity or the child turning 18, the account converts seamlessly to a regular NPS. Ideal for building long-term wealth with market-linked returns (8–10% historically).
Key Features & Benefits
- Minimum Contribution: ₹1,000/year; flexible monthly/quarterly payments.
- Tax Advantages: Extra ₹50,000 deduction (old regime); partial withdrawal tax-free at maturity.
- Flexibility: Auto-converts to adult NPS at 18; up to 60% lump-sum withdrawal tax-free at 60.
- Returns: Equity/debt allocation options for higher growth potential.
Example: ₹5,000 Monthly from Age 5
At 10% return, corpus could grow to ~₹1.5–2 crore by age 60, with tax savings of ₹15,600/year (30% slab).
How to Start: Open via banks, post offices, or e-NPS portal with child's birth certificate and guardian KYC. Project NPS growth →