NPS Vatsalya Scheme 2026: Eligibility, ₹250 Contribution, Benefits & Rules

NPS Vatsalya Scheme 2026: Complete Details, Eligibility, Contribution, Withdrawal and Tax Benefits

NPS Vatsalya is a contributory savings and long-term financial security scheme designed specifically for minors. Under the scheme, parents or legal guardians can open an NPS Vatsalya account in the name of a child and make long-term investments for the child's future.

NPS Vatsalya was launched on 18 September 2024 and is part of the National Pension System regulated by the Pension Fund Regulatory and Development Authority (PFRDA). PFRDA issued the NPS Vatsalya Scheme Guidelines 2025 in January 2026, providing updated rules for contributions, withdrawals and the transition after the minor becomes an adult.

What is NPS Vatsalya?

NPS Vatsalya is a long-term savings and financial security scheme for minors. It is designed to encourage early financial planning and disciplined long-term savings in the name of a child.

The minor is the subscriber and sole beneficiary of the account, while the parent or legal guardian operates the account until the minor reaches 18 years of age. A Permanent Retirement Account Number (PRAN) is issued in the name of the minor.

Who is Eligible for NPS Vatsalya?

An NPS Vatsalya account can be opened for an eligible Indian citizen below 18 years of age. Eligible NRI and OCI minors can also be covered under the applicable rules. The scheme is gender-neutral.

• The minor must be below 18 years of age.
• The minor is the subscriber and beneficiary.
• A parent or legal guardian operates the account.
• One NPS Vatsalya account can be opened for a minor, subject to applicable rules.

How Much Can You Contribute to NPS Vatsalya?

Under the updated NPS Vatsalya Guidelines, the minimum contribution at account opening is ₹250, and the minimum contribution in each financial year is ₹250. There is no maximum contribution limit.

Parents, guardians, relatives and friends can also contribute to the minor's NPS Vatsalya account through permitted channels.

How is the NPS Vatsalya Money Invested?

The guardian can select a Pension Fund registered with PFRDA. Contributions are invested by the selected Pension Fund according to the applicable investment framework.

Since returns are market-linked, NPS Vatsalya should not be treated as a fixed-interest deposit or guaranteed-return investment.

When Can Money Be Withdrawn from NPS Vatsalya?

Partial withdrawal is permitted under specified circumstances after completion of at least three years from the opening of the account.

Permitted purposes include:

• Education of the minor subscriber
• Treatment of specified illnesses
• Disability of more than 75% of the minor subscriber

Partial withdrawal can be up to 25% of the minor subscriber's own contributions, excluding investment returns. Under the updated guidelines, up to two partial withdrawals are permitted before the age of 18 and two additional withdrawals between 18 and 21, subject to applicable conditions.

What Happens When the Child Turns 18?

When the subscriber turns 18, fresh KYC has to be completed and the required nominee details have to be furnished. The management of the account then passes to the subscriber.

Between the ages of 18 and 21, the subscriber broadly has the following options:

1. Continue NPS Vatsalya

The subscriber can continue under the scheme, subject to applicable rules, up to the age of 21.

2. Shift to NPS

After completing the required KYC, the accumulated corpus can be shifted to NPS under the All Citizen Model or another applicable NPS model.

3. Exit from the Scheme

If the subscriber chooses to exit, the applicable withdrawal and annuity rules depend on the size of the accumulated corpus. If the corpus is less than ₹8 lakh, the entire corpus can be withdrawn as a lump sum. If the corpus is ₹8 lakh or more, up to 80% can be withdrawn as a lump sum and at least 20% has to be utilised for purchase of an annuity.

What Happens If No Option Is Chosen by Age 21?

If the subscriber does not exercise an available option between 18 and 21 years of age, the account may automatically shift to a higher-equity scheme under the Multiple Schemes Framework of the same Pension Fund. The applicable NPS exit and withdrawal regulations will then govern the account.

NPS Vatsalya Tax Benefits

The tax treatment of NPS Vatsalya depends on the applicable Income-tax provisions and the tax regime selected by the taxpayer. According to PFRDA's updated information, eligible contributions by a parent or guardian can qualify for a deduction of up to ₹50,000 under the old tax regime under the applicable provision. This deduction is not available under the new tax regime.

Tax treatment of partial withdrawals and exit proceeds is governed by the applicable provisions of the Income-tax Act, 2025. Tax rules can change, so taxpayers should check the latest Income Tax Department provisions before claiming any benefit.

How to Open an NPS Vatsalya Account?

An NPS Vatsalya account can be opened through registered Points of Presence (PoPs). Online facilities through eNPS and other permitted digital channels are also available under the applicable framework.

Documents Required

The minor needs proof of date of birth. Depending on the applicable requirements, documents such as a birth certificate, school leaving or matriculation certificate, passport or PAN may be used.

The parent or legal guardian needs to provide the required KYC documents and PAN/Form 60 as applicable.

Benefits of NPS Vatsalya

• Long-term savings can be started in the child's name at an early age.
• The account can be opened with a minimum contribution of ₹250.
• There is no maximum contribution limit.
• The parent or guardian operates the account until the child becomes an adult.
• Market-linked investments provide long-term wealth-creation potential.
• Partial withdrawal is permitted for specified purposes.
• After 18, the subscriber gets options to continue, transfer or exit under applicable rules.

Does NPS Vatsalya Provide Guaranteed Returns?

No. NPS Vatsalya does not provide a fixed or guaranteed interest rate. Returns are market-linked and can vary according to the selected Pension Fund and investment performance. Parents should understand the market-linked nature of the scheme before investing.

Who Can Consider NPS Vatsalya?

NPS Vatsalya can be considered by parents and guardians who want to start long-term, retirement-oriented savings in a child's name from an early age. Since the investment is market-linked, parents should consider the contribution amount, investment option, risk and withdrawal rules before making a decision.

Conclusion

NPS Vatsalya Scheme is a long-term savings and financial security scheme for minors under the National Pension System. Under the updated rules, the scheme can be started with a minimum contribution of ₹250, while there is no maximum contribution limit.

After the subscriber turns 18, the account can continue up to 21 years under applicable rules, be shifted to an applicable NPS model, or be exited according to the prescribed corpus-based rules.

Since returns are market-linked, NPS Vatsalya should not be considered a guaranteed-return scheme. Parents and guardians should check the latest PFRDA guidelines and applicable tax provisions before opening an account.

Official Sources

• PFRDA – NPS Vatsalya
• PFRDA – NPS Vatsalya Scheme Guidelines 2025
• PFRDA – NPS Vatsalya Guidelines 2025 Press Release