Topic 2: NEW RULES TO FOLLOW: APRIL 2024

The new financial year (2024-25) ushers in significant changes affecting your personal finances. From taxes and credit cards to insurance, and even FASTags, get ready for adjustments starting April 1st, 2024. This marks the implementation of the Union Budget proposals, impacting various aspects of the financial system. These few changes would provide more security to the investors and easy accessibility. Understanding these updates is crucial, as some will become essential for managing your personal finances effectively.

E-Insurance & Surrender Charges
In a notification "Protection of Policyholders’ Interests, Operations and Allied Matters of Insurers Regulations, 2024" dated March 20, 2024, the Insurance Regulatory and Development Authority of India (IRDAI) said, "Every insurer shall have in place a Board approved policy for insurance policies issued in electronic form…” Under this directive all the insurance policies like health, life and general insurance will be issued electronically. Surrender value in insurance is the sum disbursed by the insurer to the policy holder when policy is terminated prematurely. The Insurance Regulatory and Development Authority of India (IRDAI) has announced the final set of rules on surrender value. From April 1, 2024, the surrender value is expected to remain the same or even lower if policies are surrendered up to a period of within three years. However, if policies are surrendered between the fourth and seventh years, there can be a marginal increase in surrender value.

New or Old Tax Regime
The New Tax Regime will be the default tax regime from April 1. This implies that unless individuals explicitly choose to abide by the old tax structure, taxes will be automatically assessed and applied according to this new system. The income tax slabs in the new tax regime will remain unchanged for FY 2024-25 (AY 2025-26). No changes have been announced in the interim budget. With respect to these regulations under the renewed scheme of things, any individual earning an income up to Rs 7 lakh annually shall not bear liability for paying taxes. The changes aim to simplify the process of tax planning while providing relief to the taxpayers. The Centre will implement the New Tax Regime as the default setting, which implies that unless individuals manually choose to abide by the old tax structure, taxes will be automatically assessed and applied according to this new system.

New NPS Authentication
The process to log in at the website of the National Pension System (NPS) and check accounts changed on April 1. The Central Record Keeping Agency (CRA) system of NPS has implemented an Aadhaar-based login authentication mechanism that will be in addition to the website requiring user ID and personal password. Login would involve a two-factor Aadhaar-based authentication, as per changes sought by the Pension Fund Regulatory and Development Authority (PFRDA).

New Rule for FASTag
From 1st April, vehicle owner needs to update the KYC of car’s FASTag with the bank. Now its mandatory to complete KYC process for FASTag before March 31st to avoid deactivation by banks. With KYC updation payment are not possible and driver can land up paying double toll tax charges. NHAI advises the FASTag users to comply to the RBI rules for smooth transaction at toll plazas.

Credit/Debit Cards Costlier
As SBI announces removes reward points on rent payment transactions from 1st April 2024, many other banks also announced these changes in their credit card perks. The next is credit card which also announced changes for the easy access to the airport lounge facilities and there are increase in the charges too. Individuals need to check from their respective banks.

OLA Money wallet Switch
OLA Money announced that it is entirely switching to small PPI (prepaid payment instrument) wallet services, with a maximum wallet load restriction of Rs 10,000 per month starting April 1, 2024. The company sent SMSs to its customers informing them about this on March 22, 2024.

Mutual funds need KYC
From April 1, investors who have not re-done their KYC (know your customer) will be not allowed to do any MF transactions. These would include SIPs (systematic investment plan), SWPs (systematic withdrawal plan) and redemptions. Emails were sent by registrar and transfer agents (RTAs), CAMS (Computer Age Management Services) and KFin Technologies (KFintech) to mutual fund distributors (MFD) that MF investors should re-do their KYC (know your customer) by March 31. The officially valid documents as mentioned in these emails include Aadhaar card, passport, voter ID card, among others. KYC done based on proofs such as bank statements and utility bills will no longer hold valid after this deadline. By implementing these changes, we can achieve better governance of the country's financial and economic landscape. Investor awareness of these changes will empower them to make informed decisions about their financial limitations and opportunities for future spending and investments.



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