Important Changes Affecting Savings, Life Insurance, E-commerce, and the Stock Market Ahead of the Festive Season

 

As the festive season begins in October, several new rules related to taxes, insurance, investments, and savings schemes will come into effect. These changes will directly impact your financial planning. Here’s what you need to know:

1. Changes in Interest Rates on Small Savings

Interest rates on small savings schemes are likely to be revised in October. The rates on schemes such as PPF (Public Provident Fund), NSC (National Savings Certificate), and others will be reviewed, and any changes will be applicable to new investments. This move is expected to have an impact on your savings returns.

2. Revival of Disputed Schemes

The central government has introduced a scheme to settle tax disputes. Under the "Vivad Se Vishwas" (From Dispute to Trust) scheme, taxpayers can now resolve their disputes by paying a part of the disputed amount, thus avoiding further litigation. The scheme is valid until December 31.

3. Reduced Tax on Life Insurance Policies

Section 194DA: Life insurance policyholders will now face a reduced tax rate on the maturity amount. Earlier, 5% TDS (Tax Deducted at Source) was applicable on such payments; this has now been reduced, offering relief to policyholders.

4. Increased Value on Policy Surrender

Surrendering a life insurance policy before maturity will now yield a higher value. Earlier, the tax benefits on the surrendered value were less favourable. This change ensures that policyholders receive a fair amount even if they exit the policy early.

5. Reduction in TDS on Rent from 5% to 2%

Section 194IB: For those paying rent exceeding INR 50,000 per month, the TDS rate has been reduced from 5% to 2%. This change will benefit tenants and landlords alike.

6. Ease of Selling Goods on E-commerce Platforms

Section 194O: Small companies selling goods on e-commerce platforms will now have a lower tax deduction at source (TDS) rate of 0.01%, down from the previous rate of 1%. This will benefit small sellers and reduce their compliance burden.

7. More Clarity for Credit Card Holders

The Reserve Bank of India (RBI) has introduced new rules for credit card billing and payments, making it easier for users to understand and manage their credit card expenses. Interest rates and late fees will now be more transparent.

8. Premiums for Health Insurance Policies with Pre-existing Conditions to Decrease

Health insurance premiums for policies covering pre-existing conditions like diabetes, hypertension, and heart disease are set to decrease. This change is expected to make health insurance more affordable for a larger section of the population.

9. Increased Penalty for Non-disclosure of Foreign Assets

The penalty for failing to disclose foreign assets or investments in tax returns has been increased. This step is aimed at curbing tax evasion and ensuring greater compliance with the law.

10. Buyers of Buyback Shares to Pay Taxes

In the share market, investors participating in share buyback offers will now have to pay a 20% tax. Earlier, such taxes were levied on the company. This change will impact investor returns.

11. New Rule for Bonus Issues in the Stock Market

For investors in the stock market, a new rule has been introduced for companies issuing bonus shares. Now, investors must be recorded as shareholders at least two days before the record date to be eligible for bonus shares. This change ensures that only genuine investors receive the benefits of bonus issues.