April 1 signals the beginning of the fiscal year FY2024-25, bringing into effect the revised regulations outlined in the Union Budget for the income tax regime. Finance Minister Nirmala Sitharaman's interim Budget, announced in February, is set to be effective from FY25.
Here's a roundup of some of the updated rules concerning the tax regime, National Pension System (NPS), Employees’ Provident Fund Organisation (EPFO), insurance, and mutual funds (MFs), among other areas.
1. Tax Slabs Remain Steady
The interim Budget maintains the status quo on income tax slabs for the fiscal year FY2024-25, in alignment with those of the preceding year, FY2023-24. Under these slabs, income ranging from zero to Rs 3,00,000 remains exempt from taxation. Tax rates progressively increase for subsequent income brackets:
- 5% for income between Rs 3,00,001 to Rs 6,00,000
- 10% for income between Rs 6,00,001 to Rs 9,00,000
- 15% for income between Rs 9,00,001 to Rs 12,00,000
- 20% for income between Rs 12,00,001 to Rs 15,00,000
- 30% for income exceeding Rs 15,00,000
Furthermore, the Budget introduces a new default tax regime, offering taxpayers the flexibility to opt for either the new or the old tax regime.
The advantages of the new tax regime include the elimination of the requirement to maintain records of travel and rent receipts, an elevation of the basic exemption limit from Rs 2.5 lakh to Rs 3 lakh, an increase in the taxable limit to Rs 7 lakh from Rs 5 lakh, and a reduction in surcharge rates from 37 per cent to 25 per cent, specifically applicable to taxpayers with incomes exceeding Rs 5 crore.
2. Taxation on Life Insurance Policies
As per the provisions outlined in the Union Budget of 2023, within the framework of the new tax regime, any proceeds derived from life insurance policies will be subject to taxation if the annual premium paid exceeds Rs 5 lakh.
3. Digitalization Mandate for Insurance Policies
The Insurance Regulatory and Development Authority of India (IRDAI) previously announced that digitisation of insurance policies will become mandatory from April 1, 2024. This mandate will apply to all insurance categories, encompassing life, health, and general insurance, requiring policies to be issued electronically.
4. Stability in Small Saving Schemes
Interest rates for various small savings schemes will remain unchanged for the quarter starting April 1, 2024. Specifically, deposits made under the Sukanya Samriddhi scheme will continue to yield an interest rate of 8.2 per cent, while the rate for a three-year term deposit remains steady at 7.1 per cent.
Similarly, the interest rates for the popular Public Provident Fund (PPF) and post office savings deposits scheme remain unchanged at 7.1 per cent and 4 per cent, respectively.
The interest rate on the Kisan Vikas Patra stands at 7.5 per cent, with investments maturing in 115 months. Additionally, the interest rate on the National Savings Certificate (NSC) remains at 7.7 per cent for the April-June 2024 period.
The Monthly Income Scheme (MIS) will also maintain its interest rate at 7.4 per cent for investors, mirroring the rates of the current quarter.
5. Enhanced Security National pension system (NPS)
The Pension Fund Regulatory and Development Authority (PFRDA) has implemented a two-factor authentication measure to enhance security. Effective immediately, all password-based logins into the CRA system will require mandatory two-factor Aadhaar-based authentication.
6. Streamlined EPFO Transfers
The Employees’ Provident Fund Organisation (EPFO) has streamlined its processes, enabling automatic transfer of a subscriber’s balance to their new organization upon changing jobs. EPFO account holders no longer need to request the transfer of their PF amount.
7. Revision in Drug Prices
The Department of Pharmaceuticals has announced that revised ceiling rates will take effect from April 1. These revised rates will apply to essential drugs such as painkillers, antivirals, antibiotics, antimalarials, and medications for type 2 diabetes.
The adjustment in ceiling and retail prices follows an announcement by the National Pharmaceutical Pricing Authority (NPPA) regarding a 0.00551 per cent increase in the prices of drugs listed in the National List of Essential Drugs (NLEM), attributed to changes in the wholesale price index (WPI).
Under these changes, manufacturers are now permitted to adjust the maximum retail price (MRP) of scheduled formulations based on WPI, without requiring prior approval from the government.
8. FASTag KYC Compliance
It is mandatory to complete the Know Your Customer (KYC) for the car’s FASTag with the bank before March 31 to prevent deactivation by banks. Without the KYC process, payment will not be completed. The National Highways Authority of India (NHAI) has advised FASTag users to comply with Reserve Bank of India (RBI) rules for smooth transactions of toll tax charges at toll plazas.
9. Mutual Fund KYC Requirements
Effective April 1, investors must complete Know Your Customer (KYC) verification to conduct mutual fund transactions, including Systematic Investment Plans (SIPs), Systematic Withdrawal Plans (SWPs), and redemptions. KYCs previously based on proofs such as bank statements and utility bills will no longer be valid after March 31. The officially recognized documents for KYC include Aadhaar ID, passport, and voter ID, among others.
Registrar and transfer agents (RTAs) like CAMS (Computer Age Management Services) and KFin Technologies (KFintech) have notified mutual fund distributors via email, urging investors to update their KYC information by March 31.
10. Changes in SBI Card Policies
Starting April 1, 2024, SBI Card will implement changes to its reward points policy, particularly affecting the accumulation of points on rental payments. This revision will impact a range of its credit cards, notably the AURUM, SBI Card Elite, and SimplyCLICK SBI Card, among others.
Effective April 1, 2024, SBI will increase the annual maintenance charges by Rs 75 for select debit cards, as outlined on their official website.
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