Income Tax, small savings schemes to debit, credit cards: Key rules that would change from today (Oct 1)

The month of October will see a few major changes in the area of personal finance. From today (October 1, 2024), rules and regulations related to income tax, TDS on mutual funds, rents, and futures and options (F&O), small savings schemes' new rules will come into effect. Some debit and credit card rules will also change.

Here's a quick look at the new rules:

1. Income Tax rules

In the Union Budget 2024, changes to income tax regulations were announced by the Union Finance Minister, Nirmala Sitharaman. These changes are set to come into effect on 1st October. Particularly important is a significant adjustment to Tax Deduction at Source (TDS) which will be enforced from Tuesday. This adjustment involves a 10% TDS rate being applied to specified central and state government bonds. Additionally, modifications to TDS payments for activities such as life insurance policies, house rent payments, and other transactions are expected to be implemented on Tuesday as well.

Section	Present TDS Rate	Proposed TDS Rate	With effect from
Section   194DA - Payment in respect of life insurance policy	5%	2%	Oct 1
Section 194G – Commission etc on sale of lottery tickets	5%	2%	Oct 1
Section 194H - Payment of commission or brokerage	5%	2%	Oct 1
Section 194M - Payment of certain sums by certain   individuals or Hindu undivided family	5%	2%	Oct 1
Section 194-O - Payment of certain sums by   e-commerce operator to e-commerce participant	1%	0.1%	Oct 1
Section 194F relating to payments on account of   repurchase of units by Mutual Fund or Unit Trust of India	Proposed to be   omitted

          
2. STT on F&O

The Securities Transaction Tax (STT) for futures and options (F&O) is set to increase starting on Tuesday, October 1. The STT on options sales will go up from 0.0625% to 0.1% of the premium, while the STT on futures sales will rise from 0.0125% to 0.02% of the trade price.

3.  Floating Rate Savings Bonds

Any securities issued by the Central Government or the State Government that have a floating interest rate, including the Floating Rate Savings Bonds, 2020 (Taxable), will be subject to a tax deduction if the interest earned exceeds Rs 10,000 in a financial year. This change will be implemented starting from October 1, 2024.

4. Small savings scheme accounts

The Finance Minister released new regulations affecting investors in the National Savings Scheme, Public Provident Fund, and Sukanya Samriddhi Account, which will come into effect from October 1. These rules encompass the following categories:

• Non-compliant National Savings Scheme (NSS) accounts
• Public Provident Fund (PPF) accounts opened in the name of a minor
• Possession of multiple PPF accounts
• Extending a PPF account for a Non-Resident Indian (NRI)
• Rectifying a Sukanya Samriddhi Account (SSA) opened by grandparents instead of guardians.

5. Small savings scheme interest rates

The government has decided to keep the interest rates on small savings schemes such as PPF and NSC unchanged for the third consecutive quarter starting from October 1, 2024. According to the official notification, the Sukanya Samriddhi scheme will continue to offer an interest rate of 8.2 per cent, while the rate on a three-year term deposit remains at 7.1 per cent. The popular Public Provident Fund (PPF) and post office savings deposits schemes will also maintain their interest rates at 7.1 per cent and 4 per cent, respectively. The Kisan Vikas Patra will offer an interest rate of 7.5 per cent, with investments maturing in 115 months. Additionally, the National Savings Certificate (NSC) will retain its 7.7 per cent interest rate for the July-September 2024 period. Similarly, the Monthly Income Scheme will provide a 7.4 per cent return for investors, just like in the previous quarter.

6. ICICI Bank debit card

Based on information from the ICICI Bank website, beginning October 01, 2024, customers can receive two complimentary airport lounge accesses by spending Rs. 10,000 in the previous calendar quarter. The qualifying spend must be made in the preceding quarter to unlock lounge access for the following quarter. For example, to be eligible for complimentary lounge access in the Oct-Nov-Dec 2024 quarter, customers need to spend a minimum of Rs. 10,000 in the Jul-Aug-Sept 2024 quarter, and likewise for subsequent quarters.

7. HDFC credit card

HDFC Bank has recently implemented new regulations regarding the redemption of reward points on its SmartBuy platform. Starting from the fourth quarter of each calendar year, customers holding Infinia and Infinia Metal Cards can now redeem their reward points for Apple products only once per quarter. Moreover, effective October 1, 2024, the SmartBuy portal will limit the redemption of reward points for Tanishq vouchers to a maximum of 50,000 reward points per quarter specifically for the aforementioned cardholders. These changes have been put in place to enhance the reward redemption experience for customers with Infinia and Infinia Metal Cards.

8. PNB banking rules

Punjab National Bank (PNB) has released updates on service charges related to savings accounts, including changes to minimum average balance requirements, fees for demand drafts, duplicate DDs, cheques (including ECS), return charges, and locker rent costs. These revised charges will take effect starting October 1, 2024.