NPS Vatsalya: Invest ₹1000 in the government's NPS Vatsalya Yojana - know the benefits and tax exemption..

If you also want to do financial planning for your children, then the government's NPS Vatsalya Yojana is also beneficial for that. This scheme not only inculcates the habit of saving in children from a young age, but also helps parents to save tax. Recently, the central government has informed in Parliament that people's trust in this scheme is increasing rapidly. Minister of State for Finance Pankaj Chaudhary told the Lok Sabha that under this scheme, which started in September last year, 1.30 lakh minor customers have been registered till August 3 this year.

What is this NPS Vatsalya Yojana?

In simple words, it is a government pension and investment scheme for children below 18 years of age. Its main objective is to make children financially aware from an early age and create a large fund for their future. This scheme works under the rules of the Pension Fund Regulatory and Development Authority (PFRDA), so that your money remains completely safe.

Top 5 Features of the Scheme

Start with a small investment: You can open this account for your child with a minimum contribution of just ₹1000 per year. There is no maximum contribution limit.

When the child turns 18: As soon as your child turns 18, this account is easily converted into a regular NPS account, and the child gets the right to operate it.

Tax benefits to parents: This is one of the most attractive benefits. Under the old tax regime, parents could avail an additional tax deduction of up to ₹50,000 under Section 80CCD (1B) of the Income Tax Act on investments made in this scheme. This benefit is over and above your limit of ₹1.5 lakh.

Great benefit of compounding: Since this is a long-term plan, you get the great benefit of compounding on your investment, due to which even small savings become a big amount in the future.

Availability all over India: This is an all-India scheme, which any citizen of the country can avail for their children.

How can small savings become a fund of lakhs?

Let us understand through a table that if you invest a small amount every month for your child, then how big it can become after 18 years. (Based on an estimated 10% annual return)

Monthly investment Annual investment Total investment in 18 years

Estimated fund after 18 years

₹1,000 ₹12,000 ₹2,16,000 ~₹6,00,000
₹2,000 ₹24,000 ₹4,32,000 ~₹12,00,000
₹4,000 ₹48,000 ₹8,64,000 ~₹24,00,000

How to open an NPS Vatsalya account?
Opening an account is very easy. You can open it in two ways:

Offline: You can open this account by visiting your nearest bank, post office, or any Points of Presence (PoP) center, filling the form and submitting the required documents.

Online: You can also easily open an account from home through the online platform of NPS Trust.

Required documents

Child's birth certificate or school certificate

Parent/guardian's KYC (Aadhaar card, PAN card, photo)

Bank account details
The government is working to reach this scheme to as many people as possible through TV, radio, social media and print campaigns through PFRDA.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.