Budget 2025 Expectations: In the Union Budget 2024, Finance Minister Nirmala Sitharaman announced the NPS Vatsalya Yojana for minors, which was officially launched on 18 September 2024. Under this initiative of the government, parents can contribute to the National Pension Scheme (NPS) for their children, which will help secure their financial future and promote the habit of saving. The main objective of the NPS Vatsalya Yojana is to ensure financial security in the long term and encourage savings habits among children. Parents can open accounts for their children and contribute to their savings for retirement so that money-saving habits can be developed at an early age.

Clarity has not yet been given by the government about the tax implications of the NPS Vatsalya Yojana, as the tax structure for the scheme is still under review.

What do experts expect

Axis Pension Fund CEO Sumit Shukla said, "Currently, Sukanya Samriddhi Yojana is the only government-backed scheme, which is a child-focused investment scheme and also provides tax benefits. In such a situation, it is expected that additional tax deductions will be provided for investment in NPS Vatsalya Yojana in the upcoming Union Budget."

At the same time, Yogesh Kale, Executive Director, Nangia Andersen LLP said, "NPS Vatsalya Yojana is a pension scheme for minors in India that enables parents to save for the future of their children. However, tax benefits are currently not available for contributions made to NPS Vatsalya. If tax benefits are introduced in the Union Budget 2025, the government's intention to secure the future of children will be further strengthened. However, at present it is uncertain whether such benefits will be provided or not." Shefali Mundra, a tax expert at ClearTax, said, “There is currently no clarity on the tax-saving benefits for the Vatsalya scheme. But, the advanced tax policy, coupled with market-linked returns, can make the scheme more attractive for parents. For example, the introduction of tax deductions for contributions to NPS Vatsalya under the Income Tax Act can provide dual benefits.”

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