New TCS rules to depositing Rs 2,000 notes: Five personal finance changes you need to know from October 1
Starting October 1, a number of important financial rules and regulations will be implemented. These important changes range from new tax collection at source (TCS) rules to birth certificates becoming a single document for Aadhaar cards and government jobs to suspension of small savings accounts if Permanent Account Number (PAN) and Aadhaar card documents are not submitted.
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Besides, the Reserve Bank of India (RBI) may pronounce a new rule regarding the exchange of Rs 2,000 currency notes. For now, the deadline for depositing or exchanging Rs 2,000 notes is September 30.
On Tuesday, the Securities and Exchange Board of India (Sebi) extended the deadlines for nomination in eligible demat accounts and submission of PAN, nomination and KYC details by physical security holders till December 31. The earlier deadline was September 30.
Here’s the list of personal finance rules that will be implemented from October 1, 2023:
1. TCS Rules
The Finance Ministry has said that the new rule of tax collection at source (TCS) will be implemented from October 1, 2023. The new rule would affect various financial transactions, including overseas expenses. The government, in Finance Bill 2023, had increased the rate of TCS from 5 per cent to 20 per cent for remittance under the Liberalised Remittance Scheme (LRS) as well as for the purchase of overseas tour programme packages and removed the threshold of Rs 7 lakh for triggering TCS on LRS.
These changes are important for anyone planning international travel, investing in foreign stocks, mutual funds, cryptocurrencies abroad, or pursuing higher education overseas.
These two changes were not applicable when the remittance is for education or medical purpose.
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2. Small savings schemes will be frozen
Investors, who have put their money in small savings schemes such as Senior Citizens Savings Scheme (SCSS), Public Provident Fund (PPF), National Savings Certificate, and others must mandatorily submit their Permanent Account Number (PAN) and Aadhaar card documents by September 30, 2023. Or else, their accounts will be suspended from October 1 until the documents are provided, the government said in a notification.
As per the notification issued by the Ministry of Finance on March 31, 2023, small savings subscribers must submit their Aadhaar numbers and PAN numbers to post offices or banks by September 30, 2023. If they do not submit their Aadhaar numbers, their small savings accounts will be frozen and rendered inoperable from October 1, 2023.
However, account holders who have already submitted their Aadhaar while opening small savings schemes accounts need not re-submit their Aadhaar cards again.
If the small savings scheme accounts are frozen due to non-submission of Aadhaar and PAN card, then
> Account holders cannot deposit money in their savings accounts, including PPF and National Savings Scheme (NSC)
> Account holders cannot withdraw their money upon maturity of the schemes
> Interest of the small savings schemes will not be credited to the account
> Account holders cannot take a loan against these schemes or withdraw the amount prematurely from these schemes
3. Birth certificates to become a single document
From October 1, the Registration of Births and Deaths (Amendment) Act, 2023 will come into effect across the country. Under this act, the use of a birth certificate as a single document will be allowed for admission to an educational institution, issuance of a driving licence, preparation of voter list, Aadhaar number, registration of marriage or appointment to a government job.
4. RBI’s update on Rs 2,000 notes
The Reserve Bank of India had set September 30, 2023, as the last date to deposit or exchange Rs 2,000 notes. The central bank had said the notes would continue to be accepted as legal tender beyond that day, September 30, 2023.
As per the notification, the notes will be accepted at banks up to the deadline. After that, banks may decide not to accept the notes. When announcing the withdrawal, the RBI had said it would determine the future status of the notes based on the quantity returned to/deposited in banks.
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Therefore, it is expected that the central bank may announce some new rules regarding the usage of Rs 2,000 notes.
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