Key financial changes in May: ATM fee hike, ITR filing pointers, railway tickets, FD rates, and more

Starting May 1, significant financial changes are set to impact consumers across India. These would include banking activities, deposit interest rates, and ATM usage costs. Besides, it was also include new interest rate structures for savings and fixed deposits by several banks, major regional banking consolidation under the "One State-One RRB" policy, and updated ATM transaction and interchange fees as instructed by the Reserve Bank of India (RBI).

The Reserve Bank of India has approved an increase in ATM interchange fees. This fee, paid by banks when their ATMs are used by customers of other banks, will see a rise from Rs 21 to Rs 23 per transaction beyond the monthly limit. Customers in metro cities will have three free ATM transactions per month, while those in non-metro areas will enjoy five free transactions, covering both financial and non-financial activities.

Customers are entitled to five complimentary transactions per month at their own bank ATMs, covering both financial and non-financial transactions. If customers surpass this limit, banks may charge up to Rs 23 per transaction. This cap applies to all types of transactions and applicable taxes will be levied separately.

Furthermore, customers can enjoy free transactions at other bank ATMs as well. In metro centers, customers are eligible for three free transactions, while in non-metro centers they can avail up to five free transactions, as per RBI guidelines.

Railway tickets

Railway ticket booking rules will also undergo notable changes. From May 1, Indian Railway passengers holding waiting list tickets will no longer be allowed to travel in sleeper or AC coaches. Instead, these passengers will need to travel in general coaches. Additionally, the advance reservation period has been reduced from 120 days to 60 days. The cancellation refund window has also been shortened to two days, potentially affecting travel plans for many.

Banks merger

The 'One State, One RRB' policy will see the merger of 15 regional rural banks across 11 states into a single regional rural bank per state. This consolidation, effective from May 1, reduces the total number of such banks from 43 to 28. Affected states include Andhra Pradesh, Uttar Pradesh, West Bengal, and Bihar, among others. This move is expected to streamline banking services in these regions.

From May 1, the financial adjustments will encompass modifications in banking operations, deposit interest rates, and ATM transaction charges. Additionally, there will be revised interest rate frameworks for savings and fixed deposits offered by numerous banks, significant regional banking integration under the "One State-One RRB" initiative, and updated ATM transaction and interchange fees as directed by the Reserve Bank of India (RBI).

As per PIB notifications: “At present, 43 RRBs are functioning in 26 States and 2 UTs. Post amalgamation, there will be 28 RRBs in 26 states and 2 UTs with more than 22000 branches covering 700 districts. Their predominant area of operation is in rural areas with approx. 92% of branches in rural/semi urban areas.”

Tax filing 2025-26

In the realm of taxation, the Income Tax Department has introduced user-friendly ITR forms notified on April 30. Taxpayers with long-term capital gains up to Rs 1.25 lakh can now file using the simpler ITR-1 form instead of the complex ITR-2. This change aims to ease the tax filing process for small investors. The Central Board of Direct Taxes is expected to notify additional forms in early May, further facilitating tax compliance for various categories of taxpayers.

Fixed deposits

Furthermore, fixed deposit rates will see adjustments with some banks revising their policies. RBL Bank account holders will now receive monthly interest payments at a maximum rate of 7%, while Shriram Finance Limited has announced different rates for specific customers. Notably, senior citizens will receive an extra 0.50% per annum, and women depositors will gain an additional 0.10% interest per annum. These changes reflect ongoing efforts to enhance savings incentives amid fluctuating economic conditions.

Interchange fee revisions

A revision in ATM interchange fees has been approved by the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI). The new interchange fee rates will come into effect from May 1, 2025. The fee for financial transactions will be increased to Rs 19, while the fee for non-financial transactions will be set at Rs 7 starting from May 1. Additionally, Goods and Services Tax (GST) will be levied on these transactions.