The NPS Vatsalya Yojana is designed to secure the financial future of children and provide tax-saving benefits to parents. In this article, we’ll explain how the scheme works, its benefits, and how it can help you save for your child's future while offering tax advantages.
What Is NPS Vatsalya Yojana?
The NPS Vatsalya Yojana is a savings scheme for minors introduced by the Government of India . It allows parents or guardians to open accounts for their children up to 18 years of age, securing their financial future. Once the child turns 18, the account automatically converts into a regular National Pension System (NPS) account, helping the child continue building retirement savings .
This scheme not only helps accumulate funds for the child's future but also teaches them financial management at a young age. It provides a foundation for future pension savings and ensures long-term financial security. Additionally, the government has increased the employer's contribution to the NPS from 10% to 14%, further enhancing the benefits of the scheme.
Tax Savings Under NPS Vatsalya Yojana
Investing in the NPS Vatsalya Yojana also offers significant tax benefits. Employees can claim tax deductions under Section 80 CCD (1) of the Income Tax Act, allowing a deduction of up to 10% of their salary. In total, investors can save up to Rs 1.50 lakh annually under Section 80 CCE. Moreover, an additional deduction of Rs 50,000 is available under Section 80 CCD (1B), further increasing the tax-saving potential.
How the Scheme Benefits Children and Parents
For Children: By opening an account under this scheme, a substantial fund is accumulated for the child’s future needs, such as education or personal development. The scheme also instills early financial discipline, helping children understand the value of saving and managing finances.
For Parents: In addition to securing their child's financial future, parents enjoy significant tax benefits by investing in the NPS Vatsalya Yojana. With tax deductions up to Rs 2 lakh, parents can save money while ensuring a secure financial future for their children.
What Is NPS Vatsalya Yojana?
The NPS Vatsalya Yojana is a savings scheme for minors introduced by the Government of India . It allows parents or guardians to open accounts for their children up to 18 years of age, securing their financial future. Once the child turns 18, the account automatically converts into a regular National Pension System (NPS) account, helping the child continue building retirement savings .
This scheme not only helps accumulate funds for the child's future but also teaches them financial management at a young age. It provides a foundation for future pension savings and ensures long-term financial security. Additionally, the government has increased the employer's contribution to the NPS from 10% to 14%, further enhancing the benefits of the scheme.
Tax Savings Under NPS Vatsalya Yojana
Investing in the NPS Vatsalya Yojana also offers significant tax benefits. Employees can claim tax deductions under Section 80 CCD (1) of the Income Tax Act, allowing a deduction of up to 10% of their salary. In total, investors can save up to Rs 1.50 lakh annually under Section 80 CCE. Moreover, an additional deduction of Rs 50,000 is available under Section 80 CCD (1B), further increasing the tax-saving potential.
How the Scheme Benefits Children and Parents
For Children: By opening an account under this scheme, a substantial fund is accumulated for the child’s future needs, such as education or personal development. The scheme also instills early financial discipline, helping children understand the value of saving and managing finances.
For Parents: In addition to securing their child's financial future, parents enjoy significant tax benefits by investing in the NPS Vatsalya Yojana. With tax deductions up to Rs 2 lakh, parents can save money while ensuring a secure financial future for their children.
