September Financial Changes

Eight financial changes that may impact you this September

In September 2023, there are several significant financial changes that could impact your finances. From the withdrawal of Rs 2,000 notes to changes in mutual fund nominations and credit card benefits, here’s a closer look at these developments and what you need to be aware of.

1. Exchange or Deposit Rs 2,000 Currency Notes in Your Bank

The Reserve Bank of India (RBI) announced on May 19 that it would withdraw Rs 2,000 notes from circulation. This decision came with a four-month window, from May to September, for individuals to exchange or deposit their Rs 2,000 notes into their bank accounts. The last date for this facility is September 30, 2023. After this date, these notes will no longer be accepted for exchange or deposit.

2. Changes in Execution-Only Platforms (EOPs) Registration

In June, the Securities and Exchange Board of India (SEBI) introduced new regulations affecting Execution-Only Platforms (EOPs) that offer direct mutual fund investing. These regulations require EOPs to register with regulators and prohibit them from offering regular plans of mutual fund schemes. SEBI categorized EOPs into two groups:

Category 1 EOPs must register with AMFI, the mutual fund industry body.
Category 2 EOPs must register as stockbrokers with SEBI and can operate as agents of investors, but only through platforms provided by stock exchanges.
These regulations are set to come into effect on September 1. It remains to be seen how these changes will affect the prices of direct plans.

3. Mutual Fund Nominations and Opt-Out by September 30

For mutual fund holders and equity investors, it’s crucial to provide nominations or opt-out before September 30. This requirement applies to existing investors with folios created before October 1, 2022. If you fail to provide the necessary details within the specified timeline, certain transactions like redemptions, systematic withdrawal plans (SWP), switches, and systematic transfer plans (STP) will not be allowed in your applicable folios starting from October 1, 2023.

4. Nominations for Demat Account Holders

In September Financial Changes Investors in stocks through demat accounts also need to make nominations or opt-out by September 30. Failure to do so could result in the freezing of your trading and demat accounts.

5. Axis Bank’s Magnus and Reserve Credit Card Changes

Effective September 1, Axis Bank implemented significant changes to its Magnus and Reserve credit card offerings. These changes include:

Increased annual fees for the Magnus credit card.
Raised spend thresholds for the annual fee waiver on both Magnus and Reserve credit cards.
Exclusion of certain credit card spends, such as utility bill payments, from earning reward points (EDGE) and counting toward the annual fee waiver threshold.
Reduced conversion ratio for converting reward points into hotel and airline points/miles from 5:4 to 5:2.
However, existing Burgundy customers (Axis Bank’s wealth customers) or those who become one will continue to enjoy the existing miles conversion ratio of 5:4. These changes may disappoint Magnus and Reserve credit card users.

6. Last Chance for Special High-Rate FDs

Since May 2022, several banks increased their fixed deposit (FD) rates and introduced special FD schemes for specific tenures, targeting regular and senior citizens. September may mark the end of several newly-launched FD schemes from select banks. For instance:

IDBI Bank’s Amrit Mahotsav FD scheme for 375 days, offering senior citizens 7.60 percent interest per annum and general, NRE, and NRO category investors 7.1 percent interest per annum, is valid until September 30.
SBI’s WECARE FD scheme with tenures of 5 years and above, offering senior citizens an additional interest rate of 50 basis points (bps), is also available until September 30. Senior citizens opting for SBI WECARE can earn a 100 bps higher interest rate than other FD holders.
Considering these high interest rates, September might be your last chance to invest in special FD schemes.

7. PAN and Aadhaar Submission for Small Savings Schemes

In May, India Post issued a circular to streamline the documentation required for the know-your-client (KYC) process for small savings schemes. Existing India Post depositors must submit their Aadhaar before September 30, 2023, if they haven’t already done so. Additionally, if they haven’t submitted their PAN, it should be furnished within two months of meeting specific conditions:

When the balance in any account exceeds Rs 50,000.
When the aggregate of all credits in the bank account exceeds Rs 1 lakh in a financial year.
When the transfer or withdrawal from an account exceeds Rs 10,000 in a month.
Failure to submit the required documentation could result in the account becoming non-operational.

8. September 15 Deadline for Second Advance Tax Instalment

Advance tax liability is applicable to individuals with estimated tax liabilities of Rs 10,000 or more for the financial year, taking into account tax deducted and collected at source (TDS and TCS). Taxpayers must pay their annual estimated advance tax liability in four installments. The deadline for the second installment, representing 45 percent of the advance tax, is September 15. If you miss or delay advance tax payments, there is penal interest on the outstanding taxes under section 234C at a rate of 1 percent per month or part of the month.

9. Update Your Aadhaar Card Details for Free

The Unique Identification Authority of India (UIDAI) extended the deadline for free Aadhaar card updates by three months until September 14, 2023. This service is free only on the myAadhaar portal, while physical Aadhaar centers will charge a fee of Rs 50. Starting from September 15, updating your Aadhaar card will be chargeable, even on the myAadhaar portal.

In conclusion, September 2023 brings several financial changes that could impact your finances and financial planning. It’s essential to stay informed and take appropriate actions, such as exchanging Rs 2,000 notes, complying with mutual fund nomination requirements, and reviewing credit card benefits. Additionally, consider your tax obligations and take advantage of high-interest FD schemes before they may be discontinued. Finally, ensure your PAN and Aadhaar details are up-to-date, and if needed, update your Aadhaar card for free before the deadline.