Personal Finance Changes To Be Effective From Oct 1

The government has revised and issued new guidelines in personal finance that will come into effect from today. It is important to be well-versed with these changes to remain on top of your financial game.

New Debit And Credit Card Rules 

The Reserve Bank of India (RBI) in a circular released the new guidelines for your debit and credit cards to make them more secure. According to the new guidelines, card users will now be able to opt-in or opt-out of services, and adjust spend limits for international transactions, online transactions as well as contactless card transactions. Your debit and credit card services will only be enabled for transactions at ATMs (domestic) and Point of Sale (POS) terminals. But you will get an option to allow or not allow a particular service such as e-commerce or POS on the cards. Another feature that will be added to your credit and debit cards is that you will be able to set up a transaction limit. Card issuers have already started sending messages and emails to inform the customers about disabling of online payment for all debit, credit cards that have never been used for online or for contactless transactions in India or abroad.

Health Insurance Changes

The Insurance Regulatory And Development Authority Of India (IRDAI) has directed insurance companies to bring in changes in health insurance policies for both new and existing customers to cover more illness and procedures at affordable prices amidst the Covid-19 crisis. The new guidelines that will come into effect in a phased manner from Oct 1 are related to claims timeline in which an insurance provider needs to settle or reject a claim within 30 days from the date of receipt. In case of a delay, the provider must pay a 2% interest rate above the applicable bank rate on policyholder dues. The new rule also asks the insurer to not reject a genuine claim for a policy for which premium has been paid for 8 years. To make it affordable for customers, IRDA has asked insurance companies to provide an instalment option to its customers. A notification in this regard was issued in 2019 and the insurance companies were given time till September 30 to implement this change in the existing policies.

Tax On Foreign Fund Transfer

As per the new rules, a tax-collected-at source (TCS) will be levied on any funds sent abroad to buy foreign tour packages, and every other foreign remittance made above Rs. 7 lakh, will attract a tax-collected-at source (TCS) beginning October 1. If tax is already deducted at source (TDS) on that amount, no TCS will be levied. The tax on foreign tour packages will be 5% for any amount, for other foreign remittances the tax will be levied only for the amount spent above Rs. 7 lakh. The education-related remittances that are funded by loans will attract a TCS of 0.5% for the amount over Rs. 7 lakh, as per the Finance Act 2020. The Finance Bill 2020 had proposed an amendment to impose the TCS on foreign remittance and sale of overseas tour packages in February 2020.

New TCS rule For E-Commerce

The Income Tax Department has issued guidelines for applicability of TCS provision that will come into effect from today. As per the new guidelines, the e-commerce operator will deduct 1 per cent tax on the sale of goods and services. The Finance Act, 2020 inserted a new section 194-O in the Income Tax Act of 1961 which mandates that with effect from October 1, 2020, an e-commerce operator shall deduct income tax at the rate of 1 per cent of the gross amount of sale of goods or provision of service or both, facilitated through its digital or electronic facility or platform.

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