October will bring 9-[Nine] significant changes in the financial landscape that you should be aware of.

Starting on October 1, a number of new financial regulations will be in effect. Among them are the share buyback tax, the tax dispute resolution program, the limitations placed by HDFC Bank on the reward points earned by its premium Infima credit card, the guidelines for small savings accounts, and updated standards for current insurance products.

Here are some key macro data that will be released next week.

On October 1, a number of changes to the financial environment are scheduled to take effect.

With effect from October 1, the government has implemented new regulations for public provident fund (PPF) and national small savings (NSS) accounts. Reduced moratorium and waiting periods will be available to health insurance customers whose policies were issued prior to the new Insurance Regulatory and Development Authority of India (IRDAI) product regulations taking effect in March.

The Reserve Bank of India (RBI) has instructed banks to provide key facts statements (KFSs) that clearly define the effective cost of loans, removing any doubt caused by unstated fees, in order to guarantee transparency regarding interest rates on loans.

Rules revised for PPF accounts of NRIs, minors

PPF account holders who are non-resident Indians (NRIs) are subject to particular regulations. It won’t be business as usual for NRIs who have been making investments in PPF accounts without declaring their status. From July 12 to September 30, these accounts will accrue interest at the post office savings account rate. This account will not earn interest after October 1. A number of other announcements about previous NSS and Sukanya Samriddhi accounts have also been made by the government.

January-March, April-June, July-September, and October-December are the designated quarters. The number of Apple items that cardholders can currently redeem their reward points for is unlimited. In a similar vein, Tanisha voucher reward point redemptions are limited by HDFC Bank to 50,000 points every calendar quarter.

Clear interest rates for retail borrowers with a key facts statement:-

Retail loan clients will benefit from more transparency regarding loan costs as of October 1st thanks to KFS, which will be provided by banks and non-banking financial firms (NBFCs). KFS is a clear, concise synopsis that includes all important terms as well as the costs and charges associated with the loan. The RBI has stated in a regulation that it must be written in a language that the borrowers can understand.

By September 30, insurers must update their older health and life insurance plans:-

Companies have until September 30th, according to the IRDAI, to make sure that their older, current items abide with the new product laws, which were released in March of this year and were followed by a master circular in May. The requirements of the new product rules are met by the new items.

The maximum pre-existing disease waiting period for all goods will now be three years, instead of four years, under IRDAI regulations. More significantly, the eight-year moratorium period has been reduced to five years, after which claims can only be disputed based on evidence of fraud and misrepresentation.
If you currently have insurance, the new terms will be added when your policy is up for renewal.

Policyholders of endowment plans will get larger early departure benefits:-

The insurance regulator required life insurers to pay out special surrender values even if customers leave after the first year through a master circular on life insurance products released in June. The IRDAI has set a deadline of September 30 for the withdrawal or re-filing of current, non-compliant policies, even though new products are consistent with the rules.

The surrender values, or compensation on premature exit, for policyholders who leave their policy early because they discover mix-selling or are unable to pay premiums, will increase in comparison to the current situation.

In the past, policyholders had to forfeit their whole premium if they left the coverage after the first year. They will, however, be reimbursed for a portion of their premiums under the new guidelines.

Tax burden reduced: 20% TDS waived on the repurchase of mutual fund units:-

Finance Minister Nirmala Seetharaman had suggested in Budget 2024–25 to remove the 20% TDS rate on the repurchase of units by mutual funds or unit trust of India (UTI) in order to rationalize tax deducted at source (TDS) rates. Additionally, this modification will take effect on October 1.

The Income Tax Act’s Section 194F, which deals with payments made in connection with a mutual fund or UTI’s repurchase of units, was removed from the Finance Act of 2024.

Section 194F of the Act states that income tax at the rate of twenty percent shall be subtracted at the time of payment by the person who is liable for paying to any person any amount mentioned in sub-section (2) of section-80CCB.

A step towards reducing investors’ tax burden is the removal of the 20% TDS rate on mutual fund unit repurchases.

The Direct Tax Vivad Se Vishwas Scheme 2024 is introduced by CBDT:-

The Direct Tax Vivad Se Vishwas Scheme, 2024 has been announced by the Central Board of Direct Taxes (CBDT), and it will go live on October 1. Seetharaman unveiled this plan during this year’s Union Budget with the intention of lowering litigation and related expenses while streamlining and expediting the settlement of tax disputes.

For “new appellants,” this dispute resolution mechanism offers smaller settlement sums than for “old appellants.” Furthermore, taxpayers would receive lower settlement amounts if they turn in their disclosures by December 31.

Government tweaks buyback tax structure:-

Starting on October 1, a new buyback tax structure will be implemented. The buyback taxation structure has undergone major modifications by the tax authorities. Before, buybacks by firms were subject to a 20% tax rate while investors enjoyed tax-free revenue.

The tax obligation is shifted from corporations to shareholders under the new rules. The buyback proceeds will now be taxed according to the investor’s income tax bracket and regarded as dividend income rather than capital gains.

Shareholders are impacted by this shift since they are responsible for the taxes. Buybacks are a popular way for businesses to give shareholders their excess money back.