Key changes that will impact your personal finance from October

Here are 8 key changes that will impact your personal finances from October 01, 2019 onwards.

October 23, 2019 10:34 IST | India Infoline News Service
Finance concept
Your personal finance matrix means a lot of things. It includes the return on investments, the appreciation potential of assets & and your cost of borrowings, liquidity concerns and, of course, tax implications. Here are 8 key changes that will impact your personal finances from October 01st onwards.
  1. Lower cost of floating rate loans: Effective from October 01st all floating rate loans of individual borrowers and SMEs will be linked to an external benchmark like the repo rate or the T-Bill yield. That basically means, transmission will be seamless. As soon as the RBI cuts repo rates, you will see the impact on your loan cost within a few days. There is a downside risk to it. If the repo rates start rising, then your loan cost also goes up. Repo rates are currently at the lowest level since 2002.
  2. Lower yields on deposits too: The shift to floating rate benchmark has a downside risk to it. The deposit rates will also move in tandem with these rates. So, if the repo rates go down then floating rate loans will cost less. But, that will also mean that your deposits will also earn less. The good news is that if repo rates rise then the deposit rates will rise along with it. The bottom line is that your yield on deposits could become a lot more volatile.
  3. Automated and trackable tax notices: India has officially shifted to impersonal assessment of income taxes. There will be no direct involvement of any tax assessment officer in individual tax scrutiny cases. It will be automated and electronically managed on a rule-based approach. In addition, all communication by the CBDT with the individual will be accompanied by a unique document identification number (DIN), which makes tracking and audit trail a lot easier.
  4. Use debit cards over credit cards at fuel outlets: If you have been enjoying incentives at petrol pumps on your credit card usage that will stop from October 01st. Credit card transactions will no longer be eligible for the standard 0.75% write back that you used to get on your card. However, debit cards and UPI transactions will continue to get these incentives. It would make more sense for you to rely on your debit cards or UPI module to pay at the fuel stations in future.
  5. Enhanced dearness allowance for government employees: The government recently announced another dearness allowance (DA) hike for central government employees. This will include pensioners too. The additional DA is likely to be a boost for the purchasing power of government employees and pensioners and also meant to compensate them for higher cost of living. It is likely to boost consumption overall, especially for entry level goods and services.
  6. Ban on forced selling of travel insurance: The last time you booked your air ticket online, you ended up paying Rs200 extra for insurance premium. You may not have realized it because the insurance offer was in-built in the payment page. Now, that kind of smart marketing has been explicitly barred by the Insurance Regulatory and Development Authority (IRDA). In such cases the insurance company and the online marketer will be appropriately penalized. For online ticket purchases, it will be one thing less to worry about. It also adds transparency to the process.
  7. Reduction of MAB charges: Recently, there was a major furore after depositors realized that PSU banks had made thousands of crores by imposing a small minimum average balance (MAB) charge across millions of accounts. The RBI has strictly instructed banks to be more careful about such charges and to only charge for value of service provided. SBI has already taken the lead and cut its MAB charges by nearly 80% and most other banks are following suit. Effective October 2019, there will be more transparency in these MAB charges and it will also entail fewer burdens on you.
  8. Life certificate for pensioners: Pensioners are required to personally visit the bank and submit a life certificate each year in November. Effective this year, super senior citizens above the age of 80 will have the facility of submitting this certificate to the branch from the month of October itself. Such certificates will, however, continue to be valid till November 30th next year.
Most of the above changes are meant to reduce the stress on the consumers. That is surely a reason to cheer about!

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