NPS Vatsalya; All You Need To Know

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NPS Vatsalya

It was launched on September 18, 2024. This scheme is a long-term investment scheme for minors.

Tax Benefit Under Section 80CCD(1B) 

From April 1, 2025, contributions to NPS Vatsalya will qualify for an additional benefit of Rs 50,000 under Section 80CCD(1B) in the old tax regime.  

Limited Appeal Due to New Tax Regime

Since 72 per cent of taxpayers have opted for the new tax regime (which doesn’t allow this deduction), the impact of this tax benefit may be limited.  

Long-Term Investment for Minors

This scheme allows minors (under 18) to have an investment account, which can later be converted into an NPS Tier-I account.  

Shift from Forced to Voluntary Savings

The new tax regime moves away from mandatory tax-saving investments, relying instead on individuals' willingness to save for retirement.  

Low Financial Literacy Concerns

With many Indians lacking financial literacy and not planning for retirement, the success of NPS Vatsalya as a long-term investment remains uncertain.

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