NPS Vatsalya: NPS Vatsalya is a special part of the National Pension System made for children under 18. PFRDA says it is meant to help families start saving early and build a steady money habit for the child’s future. The scheme was launched on 18 September 2024 and is run under PFRDA’s rules. The government’s own budget note also said the plan can be changed later when the child becomes an adult, and the official guideline repeats that the plan can be converted after majority.
DA hike: Govt approves 2% dearness allowance raise for central govt employees
The scheme is open to all Indian citizens below 18, including NRIs and OCIs. A parent or legal guardian opens and runs the account for the child until the child turns 18. The account can be opened online through eNPS or through registered Points of Presence, and the guardian can choose a registered pension fund to manage the money.
How much Amount is Needed?
₹250 is the minimum amount needed to open the account. The minimum yearly contribution is also ₹250. There is no upper limit, so families can add more if they want. Friends and relatives can also gift money into the account.
What Papers are Needed?
For documents, PFRDA accepts a minor’s birth certificate, school leaving certificate, matriculation certificate, PAN, or passport. For the guardian, KYC papers such as Aadhaar, passport, voter ID, driving licence, or other listed documents can be used. For resident Indian children, a bank account is optional at opening, but for NRI and OCI cases it is required.
SSC GD 2026 Admit Card Soon on ssc.gov.in, Check Exam Date and Download Process
Withdrawal
Money can be taken out early only for certain reasons. These include education, treatment of specified illnesses, and disability of more than 75%. The child or guardian must stay in the scheme for at least 3 years before the first partial withdrawal.
Up to 25% of the contributions, not counting returns, can be taken out. This can be done a maximum of two times before age 18, and then two more times between ages 18 and 21 after the needed KYC is done.
Exit
When the child turns 18, the account does not just stop. It can stay in NPS for up to 3 more years, move to a normal NPS account after KYC, or be closed.
- If the total corpus is less than ₹8 lakh, the full amount can be withdrawn.
- If it is ₹8 lakh or more, up to 80% can be taken as a lump sum and at least 20% must go into an annuity.
- If no choice is made by age 21, the account moves to a higher-risk scheme under the same fund.
- If the child dies, the full amount goes to the guardian, nominee, or legal heir.
Tax rules
The tax side is also simple:
- Under the old tax regime, parents or guardians can get a deduction of up to ₹50,000 under Section 80CCD(1B) for money put into the child’s NPS Vatsalya account.
- Partial withdrawal of up to 25% of own contributions is exempt under Section 10(12BA).
- At exit, up to 60% of the corpus is tax-free, and the amount used to buy an annuity is also tax-free.
- Money received after the child’s death is not treated as income of the parent, guardian, or nominee.
