With the rising cost of education, securing a child’s future has become a top priority for parents. To help parents build a disciplined saving habit, the Indian government introduced the NPS Vatsalya scheme, which now offers tax benefits under the Income-Tax Act, 1961.
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What Is NPS Vatsalya?
Launched last year, NPS Vatsalya is a savings-cum-pension scheme regulated by the Pension Fund Regulatory Authority of India (PFRDA). This contributory scheme allows parents and guardians to save money for their minor child until they turn 18 years old.
Under the scheme, parents can invest a minimum of Rs 1,000 per month, with no upper limit. The funds can later be used to cover the child’s education and other financial needs when they reach adulthood.
Tax Benefits for Parents and Guardians
In the Union Budget 2025, Finance Minister Nirmala Sitharaman announced a tax benefit of up to Rs 50,000 for parents contributing to their child’s NPS Vatsalya account. This benefit is available under the old tax regime and falls under Section 80CCD (1B) of the Income-Tax Act, 1961.
Previously, this tax benefit was only available for those contributing to NPS Tier-1 accounts. Now, parents investing in NPS Vatsalya can also claim deductions, providing additional savings opportunities.
How to Open an NPS Vatsalya Account for Your Child
Opening an NPS Vatsalya account is simple and can be done online through the eNPS platform. Here’s a step-by-step guide:
- Visit the official website – https://npstrust.org.in/open-nps-vatsalya
- Select one of the three Central Recordkeeping Agencies (CRAs) – Protean, Kfintech, or CAMS.
- Fill in the required details – including the child’s name, date of birth, guardian’s name, PAN, email ID, and mobile number.
- Submit the form – Once all details are entered, click on the “Open NPS Vatsalya Account” tab to complete the registration process.
- The account is opened in the name of the minor and managed by the guardian until the child turns 18, ensuring financial security and stability for their future.
Why Choose NPS Vatsalya?
With rising education costs, NPS Vatsalya serves as a long-term investment plan, helping parents save systematically while also enjoying tax benefits.
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