Budget 2024: As the Finance Minister Nirmala Sitharaman is going to present the Interim Budget 2024 on February 1, there is a growing expectation for initiatives that address the financial aspirations of Indian families, particularly in the realm of child education. Some experts expect FM Sitharaman to consider a focused scheme aimed at easing the burden of saving for higher education.
ET quoted Mrin Agarwal, the Founder and Director of Finsafe India, saying that securing funds for their children’s education is a top priority for parents in India. Although various investment options exist for this purpose, not all of them offer the added advantage of tax benefits. While the Sukanya Samriddhi Yojana caters to this need by providing tax deductions and tax-free corpus, it is limited to girls below the age of 10. On the other hand, insurance plans designed for child education do provide tax breaks but often lead to parents incurring high costs, hence negatively impacting returns.
To address this gap, Agarwal suggests the Union Budget 2024 should look at the introduction of a scheme inspired by the National Pension Scheme (NPS) but exclusively designed for saving towards higher education.
This proposed scheme could include a specified lock-in period, provide market-linked returns, allow investors to choose their asset mix, and offer tax benefits on both investments and withdrawals. By encompassing these features, the scheme could serve as a comprehensive solution for effective and efficient planning for children’s education, he said.
According to an analysis by ET, while there are existing schemes catering to the funding of children’s education, a targeted initiative with tax benefits, a defined lock-in period, and flexibility in investment options would undoubtedly be a welcomed stride. Much like the Sukanya Samriddhi Yojana, it is essential that the end usage of the corpus be clearly defined, ensuring transparency and accountability in the usage of the funds.
