private finance modifications in 2021: From BNPL schemes, gold hallmarking to new auto debit mandate: 11 private finance modifications, tendencies seen in 2021

Like yearly, 2021 noticed a variety of tendencies and modifications that had an impression on the frequent man’s funds. These embrace modifications and bulletins made by the federal government and Reserve Financial institution of India (RBI) and tendencies associated to investments and spending introduced out by 12 months two of the coronavirus pandemic.

Here’s a have a look at main tendencies and modifications that impacted our private funds in 2021.

1) Purchase now, Pay Later schemes gained reputation

Purchase Now, Pay Later (BNPL) schemes have gained forex amongst web shoppers, particularly amongst younger shoppers through the pandemic

Information studies additionally state that the BNPL market in India is to rise exponentially within the coming years. Based on Redseer, a consultancy agency, the BNPL market in India would develop to $45-50 billion by 2026, up from $3-3.5 billion presently. Based on the analysis company, the variety of BNPL purchasers within the nation would possibly improve to 80-100 million by then, up from the present 10-15 million.

To cater to this rising demand many banks, ecommerce platforms and different lender have launched BNPL presents for the upcoming festive season. A lot of debtors can now benefit from the short-term credit score provided via BNPL even with out a credit score historical past.

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2) Launch of RBI Retail Direct scheme

Prime Minister Narendra Modi launched the RBI Retail Direct scheme in November of 2021. Via this scheme retail traders can now purchase and promote authorities bonds. The scheme was launched by the Reserve Financial institution of India (RBI) in its February 2021 financial coverage.

Small traders can now spend money on G-Secs by opening a gilt securities account, known as Retail Direct Gilt (RDG) Account, with the RBI.

As per the notification issued by the RBI on July 12, 2021, a retail investor can open the RDG account if they’ve following:

  • Rupee financial savings checking account maintained in India;
  • PAN issued by the Earnings Tax Division;
  • Any official legitimate doc equivalent to Aadhaar, Voter ID for KYC objective;
  • Legitimate electronic mail ID; and
  • Registered cellular quantity

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3) New auto debit guidelines

From October 1 onwards, as mandated by RBI, banks and different monetary establishments must ask clients to supply extra issue authentication if the auto-debit mandate for the fee is above Rs 5,000.

A financial institution or monetary establishment should present a message to the client at the least 24 hours earlier than the auto-debit fee is to be debited, and solely authorise the debit as soon as the client confirms it. Pre-transaction notifications can be given through SMS, electronic mail, and different digital means.

Further issue authentication can be required for recurring transactions and never for ‘once-only’ funds.

This new rule impacts customers who’ve given auto-debit mandates for recurring funds from their debit/bank cards and/or cellular wallets for funds equivalent to subscription to OTT platforms equivalent to Netflix, Amazon Prime, music apps like Spotify, Apple Music, fee of cellular payments, insurance coverage premium, utility payments and so on.

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4) SBI hikes base charge

The biggest public sector financial institution in India, State Financial institution of India (SBI), elevated base charge by 0.10 p.c or 10 foundation factors (bps), based on its web site. The brand new charge, that’s, 7.55% each year, can be efficient from December 15, 2021. This would possibly truly be a sign to the begin to the top of the regime of low rates of interest.

That’s as a result of apart from being a reference charge for debtors, the bottom charge additionally works as an indicator of the path of the general rate of interest within the financial system. An increase in base charge signifies that the falling rate of interest pattern is lastly reversing and going ahead we might even see a number of extra hikes in rates of interest.

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5) EPF associated modifications

Taxation of EPF contributions: Within the Union Finances 2021, it was introduced that the curiosity earned by the Provident Fund contributions above Rs 2.5 lakh a 12 months will now be added to the taxable revenue and taxed on the regular charges. This can solely apply to the worker’s contribution and never that of the employer.

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Linking of Aadhaar and UAN: LInking of Aadhaar and Common Account Quantity or UAN was made obligatory. EPF linking was made obligatory this 12 months. The final date for this was November 30, 2021.

It is necessary for Workers’ Provident Fund (EPF) account holders to hyperlink their UAN with their Aadhaar quantity to make sure that their employer is ready to deposit the EPF contributions to the account. From December 1, 2021, if the UAN isn’t linked with Aadhaar, then your employer will be unable to deposit month-to-month EPF contributions to your EPF account. Additional, withdrawals from EPF account won’t be allowed until the time your UAN is verified and linked with Aadhaar.

EDLI restrict hiked to Rs 7 lakh: The labour ministry has applied a choice of retirement fund physique EPFO’s trustees to hike the utmost sum assured payable below the Workers’ Deposit Linked Insurance coverage Scheme, 1976 to Rs 7 lakh from the prevailing Rs 6 lakh. The CBT had additionally determined to proceed fee of minimal sum assured of Rs 2.5 lakh below the scheme past February 14, 2020.

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EPF Covid advance: EPFO has now made a second non-refundable COVID-19 advance out there to its members in an effort to help them through the second wave of the COVID-19 pandemic. This provision permits for non-refundable withdrawals as much as 75% of the quantity remaining to the member’s credit score within the EPF account or the essential wage and dearness allowances for 3 months, whichever is much less. Nevertheless, EPF members also can apply for a smaller sum.

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6) Launch of tax division’s new e-filing tax portal

On June 7, 2021, the Earnings Tax Division unveiled its new e-filing system, www.incometax.gov.in. The earlier hyperlink www.incometaxindiaefiling.gov.in can be changed with the brand new portal. Based on the press launch, the brand new e-filing system is designed to supply taxpayers with simplicity and a contemporary, seamless expertise. The tax division’s new portal could be thought-about as an try to compete with personal revenue tax submitting web sites whereas additionally making it simpler for folks to file their revenue tax return (ITR), confirm TDS, and so forth.

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Nevertheless, the brand new tax portal which was alleged to make the lives of tax filers simple, has in truth accomplished the other. Ever because the launch it has been marred with quite a few glitches as a result of which tax filers have been discovering it tough to file their ITR. The federal government even prolonged the deadline to file ITR for FY2021-22 to December 31, 2021 as a result of this. One of many large points confronted by tax payers is that this: the brand new revenue tax portal has not thought-about/taken under consideration the total tax credit score out there within the Kind 26AS for these tax return filers.

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7) RBI says video KYC to be counted as full KYC for brand new accounts

The Reserve Financial institution of India (RBI) up to date its grasp instruction in Might on know-your-customer (KYC) requirements to make higher use of the video-based buyer identification process (V-CIP) and to make the method of updating KYC for financial institution purchasers simpler. The video-based buyer identification process can be utilized to open new accounts and to replace the KYC of present financial institution clients frequently.

“Video primarily based Buyer Identification Course of (V-CIP) is an alternate technique of buyer identification with facial recognition and buyer due diligence by an authorised official of the RE by enterprise seamless, safe, reside, informed-consent primarily based audio-visual interplay with the client to acquire identification data required for CDD objective, and to determine the veracity of the data furnished by the client via unbiased verification and sustaining audit path of the method. Such processes complying with prescribed requirements and procedures shall be handled on par with face-toface CIP for the aim of this Grasp Route,” based on an RBI notification issued on Might 10, 2021.

8) Launch of Annual Info Assertion by tax division

The newly launched Annual Info Assertion (AIS) is a device that tells taxpayers what the tax division is aware of about them. AIS is a complete assertion containing particulars of all of the monetary transactions undertaken by you in a monetary 12 months (FY), i.e. it accommodates the data which can be specified below the Earnings-tax Act, 1961.

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AIS accommodates data associated to revenue earned from varied sources equivalent to wage, dividend, curiosity from financial savings account, recurring deposits, sale and buy of fairness shares, bonds, mutual funds and so on. The assertion additionally accommodates data associated to TDS, TCS and any tax demand or refund.

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9) NPS modifications

NPS exit guidelines: The Pension Fund Regulatory and Improvement Authority (PFRDA) has amended the necessities for individuals who be a part of the Nationwide Pension Scheme (NPS) after the age of 65. PFRDA has eased the exit restrictions and allowed them to allocate as much as 50% of the capital in fairness below a brand new set of pointers.

Along with the prevailing bodily mode of withdrawal, PFRDA has launched the net and paperless process of exit to Authorities Sector clients as an possibility.

For brand spanking new subscribers becoming a member of NPS after 65 years, there may be now a three-year lock-in interval. Subscribers can withdraw 60% of the corpus as a tax-free lump quantity, and the remaining 40% have to be used to buy an annuity. The age restrict for leaving is 75. The subscriber, nonetheless, can withdraw your entire cash if the corpus is lower than Rs 5 lakh.

Asset allocation norms: Subscribers who be a part of NPS after the age of 65 can select between PF and Asset Allocation, with a most fairness publicity of 15% and 50% below the Auto and Energetic Alternative choices, respectively, based on PFRDA. The Pension Fund could be modified solely annually, whereas the asset allocation could be altered twice a 12 months.

NPS age restrict: The pension fund has elevated the age restrict for becoming a member of the NPS to 70 years. Beforehand, the admission age was 65 years previous. The NPS entry age has been modified from 18-65 years to 18-70 years. Based on a PFRDA round on the brand new pointers, any Indian citizen or Abroad Citizen of India (OCI) within the age class of 65-70 years can be a part of NPS and proceed as much as the age of 75 years.

Untimely withdrawal guidelines: In case you plan to stop the Nationwide Pension System (NPS) early, you’d obtain solely 20% of your collected wealth as a lump sum fee. You need to buy an Annuity with the remaining funds.

“If the corpus is larger than 2.5 lakh, at the least 80% of the collected pension wealth must be utilized for buy of an Annuity offering for month-to-month pension to the Subscriber. The stability 20% is payable as lump sum to the Subscriber,” based on PFRDA.

10) Gold hallmarking made obligatory

The Ministry of Shopper Affairs, Meals & Public Distribution introduced that gold hallmarking can be obligatory beginning June 16, 2021. Jewellers having an annual turnover of as much as Rs 40 lakh can be free from statutory hallmarking, based on the press launch.

It additionally specified that extra carats of gold (20, 23, and 24) can be permitted for hallmarking. In case you purchase 23-carat gold bangles, for instance, your jeweller is required to promote you hallmarked gold jewelry.

The obligatory hallmarking of gold gives surety of purity of the yellow metallic.

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11) Retail traders flock to the inventory market; unenthused by fastened revenue merchandise

India was one of many worst hit nations by Covid-19 earlier on within the 12 months, many misplaced family members, livelihoods, family revenue and rather more. In a 12 months like this, the inventory market appeared unperturbed. It touched all-time highs and appeared to disregard a lot of the devastation attributable to the second wave.

And because of the meteoric rise within the inventory market in 2021, extra retail traders are turning in direction of equities. Based on a information report in Instances of India (ToI) on December 14, 2021, between April and October 2021, rather less than 1.9 crore demat accounts had been opened, averaging 26.7 lakh per 30 days.

Nevertheless, on the similar time, the expansion of small financial savings accounts had slowed down during the last three years.

This included nearly each scheme, barring Sukanya Samriddhi for the woman youngster. Between April and November 2021, 2.3 crore new small financial savings accounts had been added, translating right into a month-to-month common of round 29 lakh. Based on a PTI information report, as many as 4.66 crore new accounts had been opened below the small saving schemes in 2018-19 which got here right down to 4.12 crore in 2019-20, Minister of State for Finance Pankaj Chaudhary stated. It additional got here right down to 4.11 crore in 2020-21, he stated.

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