NPS Vatsalya Scheme

Highlights of NPS Vatsalya Scheme in Union Budget 2025 for FY 2025-26 

• Finance Minister Nirmala Sitharaman introduced valuable tax benefits under the Old Tax Regime for contributions to the NPS Vatsalya scheme in the Union Budget 2025.

• NPS contributions to the NPS Vatsalya Scheme are eligible for a tax deduction of up to ₹50,000 under Section 80CCD(1B) of the Income-tax Act, 1961.

• Tax deductions up to ₹50,000 can be claimed annually.

• This benefit is not available under the New Tax Regime.

What is the NPS Vatsalya Scheme?

The NPS Vatsalya Scheme, launched in September 2024, is a savings-cum-pension plan tailored specifically for minors in India. It enables parents or guardians to open an NPS account for their children, ensuring long-term financial security. Upon the minor reaching 18 years of age, the accumulated corpus will be transferred to an NPS-Tier 1 account under the All Citizen Model or another non-NPS scheme, ensuring continued investment growth.

Overview of NPS Vatsalya Scheme

Investment

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₹10,000/Month

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₹1 Crore^*

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Key Features of NPS Vatsalya Scheme

Following are the key features of the NPS Vatsalya Scheme: 

• For Minors: Parents or guardians can open an account, with the child as the sole beneficiary.

• Guardian’s Role: Manages the account until the child turns 18.

• Fund Selection: Guardian can choose from the pension funds regime

• Transition at 18: Converts to an NPS Tier-1 Account (All Citizen Model) or another non-NPS account.

• PRAN Issuance: A unique Pension Retirement Account Number (PRAN) is assigned.

• KYC Update: Must be completed within 3 months after the child turns 18 for independent access.

• Contributions: Minimum ₹1,000 per year, no upper limit. Initial deposit is ₹1,000.

• Withdrawals & Exit: Allows partial withdrawals and exit under specific rules.

• Tax Benefits: Extra ₹50,000 tax deduction under Section 80CCD(1B) (old tax regime).

• Regulation: Managed by PFRDA.

• Investment Choices: Options across asset classes based on risk preference.

• Account Opening: Available at POPs (banks, India Post) and online via eNPS.

Eligibility Criteria for NPS Vatsalya Scheme

You must fulfil the following eligibility conditions before applying for this scheme:

• Indian Citizens – Available for all Indian citizens.

• Age Limit – Only for individuals up to 18 years.

• KYC Compliance – Must complete KYC verification.

Documents Required to Open NPS Vatsalya Scheme

• Aadhaar & PAN – Mobile-linked Aadhaar or DigiLocker Aadhaar and PAN of parent/guardian.

• Minor’s Age Proof – Birth certificate, school leaving certificate, matriculation certificate, PAN, or passport.

• Guardian’s Signature – Scanned copy of the parent/guardian’s signature.

• Payment Readiness – Ensure active UPI or Internet Banking for payments.

• File Size Limit – Scanned documents must be between 4KB and 2MB.

• Bank Account Details –

  • Not required for opening but needed for withdrawals before 18 years.

  • The account should be in the minor’s name.

  • If the guardian is an NRI/OCI, NRE/NRO bank details are mandatory.

How to Open an NPS Vatsalya Account?

You can follow the steps mentioned below to open a NPS Vatsalya Scheme for your child:

• Visit the eNPS Website: Go to the eNPS website and click ‘Register Now’ under ‘NPS Vatsalya (Minors)’.

• Enter Guardian’s Details: Provide the guardian’s date of birth, PAN, mobile number, and email, then click ‘Begin Registration’.

• Verify OTP: Enter the OTP sent to the guardian’s mobile and email to proceed.

• Fill in Details & Upload Documents: Enter the minor’s and guardian’s details, upload the required documents, and confirm.

• Make Initial Payment: Pay ₹1,000 as the initial contribution.

• Complete Verification & Get PRAN: Finish authentication via OTP or eSign, and the PRAN will be generated, opening the minor’s NPS Vatsalya account.

What are the Investment Choices Under NPS Vatsalya Scheme?

Following are the investment choices available under the NPS Vatsalya Scheme:

• Default Choice: Moderate Life Cycle Fund - LC-50 (50% equity).

• Auto Choice: The guardian can select one of the following options:

  • Aggressive LC-75 (75% equity)

  • Moderate LC-50 (50% equity)

  • Conservative LC-25 (25% equity)

• Active Choice: The guardian can decide the fund allocation across:

  • Equity (up to 75%)

  • Corporate Debt (up to 100%)

  • Government Securities (up to 100%)

  • Alternate Asset (up to 5%)

NPS Vatsalya Fund Withdrawal and Exit Rules

Benefits of NPS Vatsalya Scheme

The following are the key benefits of NPS Vatsalya Scheme: 

• Promotes Saving Habits: NPS Vatsalya encourages the habit of saving from an early age.

• Retirement Planning Benefits: NPS Vatsalya account helps you to build a substantial retirement corpus with early contributions in the NPS account.

• Financial Security and Stability: It ensures long-term financial stability by allowing the conversion of the NPS Vatsalya Account to a standard NPS account on attaining maturity and continuing as a reliable retirement fund.

• Financial Education and Responsibility: NPS Vatsalya helps teach children how to manage their finances responsibly from a young age, promoting savings habits as children mature.

• Systematic Approach to Financial Planning: NPS Vatsalya provides you with a structured method to secure your child’s financial future and build a huge retirement corpus.