Changes applicable from 1st October 2019 that may affect your finances.

To facilitate transparency and efficiency in the economic reforms the government along with its various undertakings and departments is continuously striving to carry the most adequate policies. These policies and reforms prove that the government is keen to boost the economy and make India a big name in the global economies.

Every change in policy by the government has a direct or indirect impact on your personal finances. Recently the government has brought some major changes that can have major impact on you. Here, is a list of things that have changed from 1st October 2019.

1. External benchmarking of loans:

As per the circular dated 24th September 2019 issue by the RBI, all the floating rate loans to be sanctioned by the banks including public sector banks on or after 1st October 2019 has to be linked to an external benchmark.

The loans that prima- facia to be linked are- personal loans, housing loans, and vehicle loans.

Before 1st October 2019, the banks use to charge interest on the loan on the basis of the marginal cost of fund-based lending rate (MCLR) which allowed banks to charge rates differently from each other. To promote transparency and assurance of transmission of policy to the end customer RBI has now introduced external lending benchmarks. These are - RBI's repo rate, yields of three and six months T- bills published by the financial benchmark India Pvt Ltd ( FBIL) or any other benchmark market rate published by FBIL.

How does it affect your loans?

Well if you have an ongoing loan as on 1st October 2019 this announcement will have no impact on your existing loan. However, if you are planning to take a floating interest rate loan you should know that as per the above-mentioned circular, the banks have to reset the external benchmark at least once in the three months. It means that the interest and EMI on the loans can be repriced one or more times every three months depending upon the benchmarking done by the bank and policies floated by the RBI

2. Document Identification Number

Central board of direct taxes (CBDT) through a press release in the month of August announced with effect from 1st October 2019 all letters and notices from the income tax department will carry a computer-generated Document Identification Number (DIN) which will be verifiable on the department's e-filing portal. Further, any communication from the department without this DIN will be treated as invalid. Henceforth, any manual communication from the income tax department will be allowed only in special cases and with special permission from the assessing officer. Also, all these manual communications have to be regularised on the portal with 15 days.

What is the need for doing this?

The action from the CBDT is taken to improve the accountability and transparency in the working of the income tax department. This will also help the taxpayer to avoid fake notices and scams as every communication can be verified before taking any action.

3. No more discounts and benefits for credit card payments on petrol pumps.

Almost two and 3 years back the government asked all major oil and petroleum companies like Hindustan Petroleum, Indian oil corporation and Bharat petroleum etc to give an additional 0.75 % discount on the purchase of diesel and petrol made through the credit cards. The government floated this additional benefit to promote digitalization in the flow of the money.

The government has asked the companies to discontinue these discounts on the payments made through the credit cards with effect from 1st October 2019. However, the discount will continue on debit cards and other modes of payment other than cash.

4. IRDAI cuts down the miss-selling of travel Insurance.

Insurance regulatory and development authority of India in the circular dated 27th September 2019 directed all the insurance companies to make ensure that any traveling portal or app shall not be allowed to offer any travel cover at the time of buying the tickets prior than 90 days.

It means customers will not be allowed to buy travel insurance along with their travel tickets if they buy domestic travel tickets 90 days or more before the commencement of the journey.

What is gonna be its effect?

This will safeguard the customer against the miss-selling of travel insurance. As no unauthorize or unregulated body can claim to over any kind of travel cover for the journey and the customer can be sure of the authenticity of the travel cover available. This will also reduce the prices of the tickets and packages offered by these portals and apps. 

5. Happiness for the government pensioners' family. 

The central government in its meeting with various departments head has decided that with effect from 1st October 2019, the families of the government employees dying before serving the period of at least 7  years will also be eligible for the enhanced pension. 

What does this mean? 

Earlier, it was compulsory for an employee to render a service of at least 7 years before his decease for his family to be able to claim the enhanced family pension of 50% of the last drawn salary. However, now on the serving period of the deceased employee will be immaterial in deciding the eligibility of the enhanced pension.