October 1, 2024, brings significant changes in tax, investment, and savings rules, impacting millions of taxpayers, investors, and savers. These changes will affect everything from mutual fund taxation to PPF rules for NRIs. If you are someone who saves or invests money, these new regulations can affect your financial planning. Here’s a detailed look at the 11 key updates you need to be aware of.
1. Changes in PPF Rules for NRIs
From October 1, NRIs (Non-Resident Indians) who invest in the Public Provident Fund (PPF) without disclosing their non-resident status will face a significant change. These individuals will not earn interest on their PPF accounts anymore. This move is aimed at curbing any misuse of PPF benefits that are meant primarily for Indian residents.
2. HDFC Infinia Credit Card Rewards Program Update
If you own HDFC Bank’s Infinia Credit Card, there’s an update on its rewards redemption system. Starting October 1, cardholders will only be allowed to redeem points for one Apple product per quarter via HDFC’s SmartBuy platform. Similarly, redemption rules for Tanishq vouchers will also see changes. This is important to know if you are a frequent user of reward points for high-value purchases.
3. Banks and NBFCs to Issue Key Fact Statements (KFS)
A major change for loan customers is that from October 1, all banks and Non-Banking Financial Companies (NBFCs) must issue a Key Fact Statement (KFS) when granting loans. The KFS will provide transparency regarding the total fees, interest rates, and other charges associated with the loan. This move is expected to enhance customer understanding and help avoid hidden charges.
4. New Rules for Existing Insurance Policies
Insurance policyholders will face a new set of rules starting October 1. The Insurance Regulatory and Development Authority of India (IRDAI) has mandated that all existing life and health insurance policies must align with the latest regulatory guidelines. So, if you have an old policy, expect new clauses to be added when you renew it. These changes will ensure that older policies are updated with modern benefits.
5. Higher Surrender Value for Insurance Policies
In a significant relief for policyholders, from October 1, insurance companies will have to pay a special surrender value if a policyholder exits the policy after one year. Earlier, policyholders would lose most of their premium if they surrendered the policy within the first few years. This rule is expected to make insurance policies more customer-friendly by offering a fair surrender value.
6. TDS Exemption on Mutual Fund Unit Repurchases
Good news for mutual fund investors: the 20% TDS (Tax Deducted at Source) on the repurchase of mutual fund units has been removed. This rule comes into effect on October 1, and it is aimed at reducing the tax burden on mutual fund investors. This change could lead to higher net returns for investors who sell their units back to the fund.
7. Increase in STT on F&O Trades
Securities Transaction Tax (STT) on futures and options (F&O) trades will increase from October 1. This was announced in the Union Budget and is intended to curb excessive retail participation in high-risk trading instruments. STT on options will increase to 0.1%, while STT on futures will rise to 0.02% of the trade price. Traders in F&O markets should take note of these increased costs when planning their trades.
8. TDS on Interest from Government Bonds
Another important tax update is that starting from October 1, a 10% TDS will be imposed on interest earned from certain central and state government bonds, including floating rate bonds. This is a significant change, as government bonds were previously exempt from TDS. However, if your annual interest income from these bonds is less than ₹10,000, you will not be subject to TDS. This change may slightly impact the returns for small investors in government bonds.
9. Tax on Share Buybacks
If you’re an investor who participates in share buybacks, there’s an important change coming your way. From October 1, the new tax rules for share buybacks will apply, meaning investors will now have to pay capital gains tax on any profits earned during a share buyback. Earlier, companies paid tax on buybacks, but now the onus has shifted to individual investors, which might reduce the attractiveness of buyback programs.
10. Changes in Aadhaar Usage
From October 1, the Aadhaar Enrollment ID will no longer be accepted for applying for a PAN (Permanent Account Number) or for filing an income tax return. This step has been taken to prevent misuse of Aadhaar data and ensure better security. If you are yet to receive your Aadhaar, you will now need the physical Aadhaar card or its number for tax-related procedures.
11. Vivad Se Vishwas Scheme 2024 to Settle Tax Disputes
Finally, taxpayers with pending disputes have an opportunity to resolve them under the Direct Vivad Se Vishwas Scheme 2024, starting from October 1. The scheme allows individuals and businesses to settle their tax cases by paying a lower penalty and interest. If your tax dispute is pending with appellate authorities, the High Court, or the Supreme Court as of July 22, 2024, you can take advantage of this scheme to close the case more favorably.
These new rules coming into effect from October 1, 2024, are crucial for anyone involved in savings, investment, or tax planning. From changes in PPF rules for NRIs to new regulations for mutual funds, insurance, and credit cards, staying informed will help you adjust your financial strategy and avoid any unexpected surprises.
