The Union Budget 2025-26, presented by Finance Minister of India Nirmala Sitharaman, has brought significant changes and new allocations aimed at improving the lives of women and children via NPS Vatsalya, senior citizens, and vulnerable communities across India. Typically, the Union Budget is a crucial event that sets the tone for the country’s economic and social policies for the coming year.
This year, the government has focused on expanding social development schemes, with notable increases in funding for programs like the NPS Vatsalya scheme and Mission Shakti. These initiatives are designed to strengthen social welfare and provide better support for those in need.
Key Highlights of the NPS Vatsalya Scheme
NPS Vatsalya Tax Break: The union budget 2025-26 extends the tax benefits available under Section 80CCD(1B) of the Income Tax Act, 1961, to contributions made to NPS Vatsalya accounts. This allows contributors to claim an additional deduction of up to ₹50,000, over and above the standard ₹1.5 lakh deduction under Section 80C. This move aligns the NPS Vatsalya scheme with regular NPS accounts, ensuring equal tax-saving opportunities within existing limits.
Child-Centric Financial Planning: NPS Vatsalya scheme, a dedicated child welfare investment fund, is designed to provide long-term financial stability for children through structured contributions. By offering this tax break, the government aims to incentivise families to prioritise investments for their children’s education, healthcare, and overall development.
Statements From the Finance Ministry
During her budget presentation, Finance Minister Nirmala Sitharaman emphasised the importance of financial planning for future generations. “It is proposed to extend the tax benefits available to the National Pension Scheme (NPS) under sub-section (1B) of section 80CCD of the Income-tax Act, 1961 to the contributions made to the NPS Vatsalya accounts, as applicable,” Sitharaman stated.
She further highlighted that the government’s goal is to create a comprehensive financial ecosystem that supports not just immediate developmental needs but also long-term welfare through investment-friendly policies.
Impact on Families and Financial Planners
This tax incentive is expected to be a game-changer for families looking to secure their children’s futures while benefiting from tax savings. Financial planners and advisors predict a surge in the popularity of NPS Vatsalya accounts, as the scheme now offers dual advantages: long-term wealth accumulation and immediate tax relief. With this additional ₹50,000 tax deduction, parents now have a stronger incentive to invest in their children’s futures.
By simply accessing their NPS login, parents can easily manage contributions and track the growth of their investments, making it a smart move that encourages disciplined savings while providing tax relief.
Tax Exemption for National Savings Scheme Withdrawals
One major announcement in the latest budget was the exemption of withdrawals from inactive National Savings Scheme (NSS) accounts from income tax. This change is set to take effect on August 29, 2024. Typically, such inactive savings accounts have been an area of concern for many senior citizens and long-term savers who rely on the savings as a source of income after retirement.
The government aims to provide relief to those dependent on these national savings schemes by making withdrawals tax-free. This move will likely benefit individuals who are using these savings to meet living expenses in their old age.
Increased Funds for Women and Child Development Initiatives
The Ministry of Women and Child Development has been allocated ₹26,889.69 crore in this year’s budget, significantly higher than last year’s revised amount of ₹23,182.98 crore. A major portion goes towards Saksham Anganwadi and POSHAN 2.0 schemes to tackle malnutrition through Anganwadi centers and nutrition programs, now allotted ₹21,960 crore, up from ₹ 20,070.90 crore.
These schemes reach over 8 crore undernourished children and mothers in aspirational districts. Additionally, the budget for NPS Vatsalya, the child protection program focused on institutional and family-based care models for vulnerable children, has increased from ₹1,391 crore to ₹1,500 crore. The heightened investments reflect the government’s ongoing commitment to advancing child and women’s welfare through critical programs on nutrition, healthcare, and social security.
Funds to Empower Women through Mission Shakti
The budget has earmarked ₹3,150 crore for Mission Shakti, the government’s umbrella program for women’s empowerment. This includes ₹629 crore for immediate relief efforts like Beti Bachao Beti Padhao and women’s helplines under Sambal and ₹2,521 crore for long-term interventions like maternity benefits and working women’s hostels under Samarthya.
Additionally, ₹30 crore is allocated to the Nirbhaya Fund for women’s safety and ₹120 crore for the welfare of vulnerable tribal groups under the PM JANMAN program. Overall, the budgetary allocations reflect the government’s continued commitment to addressing the needs of marginalised women through various targeted schemes and initiatives.
Conclusion
The Union Budget 2025-26 highlights the government’s focus on social development and welfare. By increasing allocations to key programs like NPS Vatsalya and Mission Shakti, the budget typically aims to strengthen early childhood care, improve nutrition, and enhance protection for vulnerable groups across the country.
The tax relief measures for the National Savings Scheme account and the extension of benefits to NPS Vatsalya accounts are generally expected to provide significant financial support to individuals and families. Overall, the budget reflects a balanced approach to economic growth and social welfare, ensuring that development reaches all sections of society.
ThePrint ValueAd Initiative content is a paid-for, sponsored article. Journalists of ThePrint are not involved in reporting or writing it.