NPS Vatsalya tax benefits: FM proposes to cover NPS Vatsalya under 80CCD(1B) tax break NPS Vatsalya is a pension scheme for minor children aimed at developing early saving habits for retirement. The proposal is pending parliamentary approval
Finance Minister Nirmala Sitharaman in her budget 2025 speech announced that NPS Vatsalaya subscribers will now receive the same tax benefits under Section 80CCD(1B) as regular NPS subscribers for their contribution. Note that this benefit is not available under New Tax regime. This could encourage more savings for retirement and dependent security under the NPS scheme. Budget proposes are subject to passing of the Finance Bill by both houses of parliament.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} Budget with ET
Union Budget 2025 Live Updates
Income Tax Budget 2025 Live Updates
Sensex Today | Stock Market LIVE Updates
The Pension Fund Regulatory and Development Authority (PFRDA) is the regulatory body overseeing the scheme, ensuring transparency and secure management of investments.
Also read | No income tax for income up to Rs 12.75 lakh for salaried individuals under the new tax regime
Finance Minister in her Union Budget 2025 stated, “It is proposed to extend the tax benefits available to the National Pension Scheme (NPS) under sub-section (1B) of section 80CCD of the Income-tax Act, 1961 to the contributions made to the NPS Vatsalya accounts, as applicable.”
If implemented, taxpayers contributing to NPS Vatsalya accounts (presumably for children, dependents, or specific beneficiaries), would be eligible to claim an additional Rs 50,000 tax deduction under Section 80CCD(1B), similar to the deductions available for regular NPS contributions.
Artificial Intelligence(AI)
Java Programming with ChatGPT: Learn using Generative AI
By - Metla Sudha Sekhar, IT Specialist and Developer
Artificial Intelligence(AI)
Basics of Generative AI: Unveiling Tomorrows Innovations
By - Metla Sudha Sekhar, IT Specialist and Developer
Artificial Intelligence(AI)
Generative AI for Dynamic Java Web Applications with ChatGPT
By - Metla Sudha Sekhar, IT Specialist and Developer
Artificial Intelligence(AI)
Mastering C++ Fundamentals with Generative AI: A Hands-On
By - Metla Sudha Sekhar, IT Specialist and Developer
Artificial Intelligence(AI)
Master in Python Language Quickly Using the ChatGPT Open AI
By - Metla Sudha Sekhar, IT Specialist and Developer
Marketing
Performance Marketing for eCommerce Brands
By - Zafer Mukeri, Founder- Inara Marketers
Office Productivity
Zero to Hero in Microsoft Excel: Complete Excel guide 2024
By - Metla Sudha Sekhar, IT Specialist and Developer
Finance
A2Z Of Money
By - elearnmarkets, Financial Education by StockEdge
Marketing
Modern Marketing Masterclass by Seth Godin
By - Seth Godin, Former dot com Business Executive and Best Selling Author
Astrology
Vastu Shastra Course
By - Sachenkumar Rai, Vastu Shashtri
Strategy
Succession Planning Masterclass
By - Nigel Penny, Global Strategy Advisor: NSP Strategy Facilitation Ltd.
Data Science
SQL for Data Science along with Data Analytics and Data Visualization
By - Metla Sudha Sekhar, IT Specialist and Developer
Artificial Intelligence(AI)
AI and Analytics based Business Strategy
By - Tanusree De, Managing Director- Accenture Technology Lead, Trustworthy AI Center of Excellence: ATCI
Web Development
A Comprehensive ASP.NET Core MVC 6 Project Guide for 2024
By - Metla Sudha Sekhar, IT Specialist and Developer
Marketing
Digital Marketing Masterclass by Pam Moore
By - Pam Moore, Digital Transformation and Social Media Expert
Artificial Intelligence(AI)
AI-Powered Python Mastery with Tabnine: Boost Your Coding Skills
By - Metla Sudha Sekhar, IT Specialist and Developer
Office Productivity
Mastering Microsoft Office: Word, Excel, PowerPoint, and 365
By - Metla Sudha Sekhar, IT Specialist and Developer
Marketing
Digital marketing - Wordpress Website Development
By - Shraddha Somani, Digital Marketing Trainer, Consultant, Strategiest and Subject Matter expert
Office Productivity
Mastering Google Sheets: Unleash the Power of Excel and Advance Analysis
By - Metla Sudha Sekhar, IT Specialist and Developer
Web Development
Mastering Full Stack Development: From Frontend to Backend Excellence
By - Metla Sudha Sekhar, IT Specialist and Developer
Finance
Financial Literacy i.e Lets Crack the Billionaire Code
By - CA Rahul Gupta, CA with 10+ years of experience and Accounting Educator
Data Science
SQL Server Bootcamp 2024: Transform from Beginner to Pro
By - Metla Sudha Sekhar, IT Specialist and Developer
Also read | Income Tax Slabs Budget 2025 Live Updates
Current tax benefit for NPS contributions (Section 80CCD(1B))
Section 80CCD(1B) of the Income-tax Act allows an additional tax deduction of up to Rs 50,000 for contributions made by individuals to the National Pension System (NPS).
This deduction is over and above the Rs 1.5 lakh limit under Section 80C.
What is NPS Vatsalaya?
NPS Vatsalya is a pension scheme for minor children in India. It is a part of the National Pension System (NPS). The scheme is designed to help children develop the habit of saving for retirement from a young age.Features of NPS Vatsalya
Parents or guardians can open an NPS account for their children The minimum contribution is Rs 1,000 per year, and there is no limit on the maximum contribution The Pension Fund Regulatory and Development Authority (PFRDA) regulates and administers the scheme The scheme can be opened online through the eNPS platform The scheme aims to help children build long-term financial securityWhat are exit options upon reaching majority
When the child turns 18, they have the option to exit the scheme instead of converting it into a regular NPS account. Here are the exit rules, according to the Protean website:
Annuity Purchase Requirement: At least 80% of the accumulated funds must be invested in an annuity plan to ensure future pension benefits.Lump Sum Withdrawal: The remaining 20% of the corpus can be withdrawn as a lump sum.Exception: If the total accumulated corpus is less than Rs 2.5 lakh, the entire amount can be withdrawn in a lump sum without the requirement to invest in an annuity.
How to apply
Parents and guardians can apply for NPS Vatsalya online or offline..
Application Steps:
Gather Required Documents: Ensure you have the necessary documents like Aadhaar and PAN cards for both the guardian and the child.
Choose Application Mode: Decide whether to apply online through the official eNPS portal or offline via authorized banks and financial institutions.
Fill Out the Application Form: Complete the required details accurately.
Submit Documents: Attach the necessary documents as per the guidelines.
Verification and Approval: The application will undergo verification by the PFRDA for approval.
#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
This story originally appeared on: India Times - Author:Faqs of Insurances
