nps vatsalya scheme tax benefits – Budget 2025
NPS Vatsalaya Scheme tax benefits in budget 2025.
In addition, the NPS vatsalya scheme is designed for minors whose age is below 18 years of age.
In addition, this account is managed by the parents/guardians of the minors.
Moreover, this scheme is regulated by PFRDA (Pension Regulatory Board of India).
Read this article to know complete details about this scheme.
NPS VATSALYA SCHEME tax benefits (from 1st April 2025)…
The NPS valsalya scheme will also get the same tax benefits as the NPS account.
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Tax deduction under Section 80ccd(1B).
# The parent/guardian can claim up to Rs. 50,000 in tax benefit under Section 80ccd(1B).
# In addition, this deduction is allowed for both the NPS accounts of parents and children in the NPS Vatsalya scheme, both combined.
# However, this tax benefit is available in the old tax regime. And the new tax regime will not allow this tax benefit.
2. Taxation to NPS Vatsalya Scheme on withdrawals…
If tax deduction is claimed by parents on the contributions to this account.
Then, for future withdrawals after age, both the amount contributed to this account and returns are taxed.
3. Nil tax on withdrawals if a minor is dead…
In case a minor child is dead, then the withdrawals made by parents/guardians will not be taxed.
4. Specific need withdrawals will not be taxed…
Some specific withdrawals get a tax-free benefit.
1). Minor child higher education.
2.) Treatment for serious illness.
3) In cases of disability, the minor withdrawals are tax-free.
However, such withdrawals are tax-free only up to 25% of the contribution made by the parent/guardian accumulated under this scheme. Above that is taxed.
The bottom line…
As per the Budget 2025…
NPS vatsalya scheme for minors will get tax benefit under Section 80ccd(1B) on the contributions up to Rs. 50,000 in the old tax regime.
And the withdrawals made after age 18 will be taxed if the deductions were claimed earlier.
In addition, there is no taxation if a minor dies earlier than their parent/guardian.
Finally, nil taxation up to 25% of the contrubution in case of education, disability, and medical treatment for the minor child.
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