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Yearender 2023: 9 Major Changes In Personal Finance Rules For Senior Citizens

The personal finance space saw several significant changes this year with long-term impact.

Versha Jain
December 30, 2023
Changes In Personal Finance

Changes In Personal Finance

After the COVID-19 disruptions, 2023 saw a significant recovery in the personal finance space as proactive government policies have considerably relieved the senior citizens and the girl child. Here’s a list of nine major Changes In Personal Finance impacting seniors and the girl child.

Mahila Samman Scheme

This social security scheme was launched on April 1, 2023, for women and the girl child. One could initially subscribe to the scheme only through the post offices, but it has now been made available via several banks. As per government data, 18 lakh accounts were opened within six months of the launch. This one-time small savings scheme is for two years with a 7.5 percent interest payable on maturity, which is taxable. The minimum investment is Rs 1,000, and the maximum is Rs 2 lakh.

Senior Citizen Savings Scheme (SCSS)

This scheme has undergone several changes this year. The maximum investment limit was increased from Rs 15 lakh to Rs 30 lakh in the 2023 budget. On November 9, 2023, the government announced more changes in the scheme. Now, the spouse of a central or state government employee can invest if the primary subscriber dies at age 50 or older. Besides, the account holder can extend the account in blocks of three years. This change can help address senior citizens’ cash flow needs for life.

ALSO READ: Can SCSS Account Be Extended Indefinitely Or Spouse Contribute After Subscriber’s Death?

Change InTax Slabs

The new tax regime was made the default one from FY2023-24. However, one can still opt for the old tax regime. The new regime does not offer the tax rebates like the old one. In the old tax regime, senior and super senior citizens could get tax exemptions of Rs 3 lakh and Rs 5 lakh, respectively, and others get Rs 2.5 lakh. The new regime’s exemption limit is Rs 3 lakh for all, besides a standard deduction of Rs 50,000 for salaried persons.

Debt Mutual Fund Taxation

There have been these changes in personal finance recently which includes Debt Mutual Fund Taxation. The indexation benefit on debt funds was removed, making them taxable as per the tax slabs. A debt mutual fund scheme invests less than 35 per cent in equities. This change has made debt funds less attractive from a tax point of view. Gold mutual funds, international equity funds, and funds of funds no longer have the indexation benefit.

Life Insurance Policy

In August 2023, the Central Board of Direct Taxes (CBDT) issued tax guidelines for insurance policies under section 10 (10D) of the Income-tax Act, 1961. As per the amendment, if the premium of a life insurance policy issued on April 1, 2023, or after, is more than Rs 5 lakh in a year, its maturity amount, including bonus, will be taxable. Earlier, section 10 (10D) provided income tax exemption on the sum received, including bonus, if any.

Unclaimed Deposit

The government launched the ‘Unclaimed Deposits Gateway to Access Information’ or UDGAM portal on August 17 this year to help people check and retrieve their unclaimed deposits lying with banks for 10 years or more or make the account active again. As informed in parliament on December 19, 2023, there has been a 28 per cent increase in unclaimed deposits year-on-year as of March 2023 compared to FY2022.

ALSO READ: UDGAM Portal Onboards 30 Banks: Here Is How To Check Unclaimed Deposits

National Pension System (NPS)

The Pension Regulatory and Development Authority (PFRDA), on October 28, 2023, revised the NPS withdrawal rules, offering flexibility to investors. The introduction of the Systematic Lumpsum Withdrawal (SLW) rule allows the NPS investor to withdraw up to 60 per cent of the fund monthly, quarterly, half-yearly, and annually instead of a lump sum at retirement. This change will help retirees’ cash needs. Also, the QR code payment facility through UPI for direct remittance offers flexibility to senior citizens.

Kurian Jose, CEO of Tata Pension Management, says, “PFRDA’s decision to introduce QR codes to contribute to NPS using UPI-enabled apps is in keeping with the times and a step in the right direction. Making payments using QR codes offers several conveniences like simplicity, speed, and versatility of the process, which will boost the overall experience of subscribers in NPS.”

ALSO READ: How Does Systematic Lumpsum Withdrawal Facility Help NPS Subscribers?

Besides these changes in personal finance, two other vital deadlines are due to expire this year. These changes are expected to boost security and transparency in financial transactions.

Mutual Funds & Demat Account Nomination

The Securities and Exchange Board of India (Sebi) set December 31, 2023, deadline to provide or update the nominees to mutual fund and demat accounts, but on December 27, 2023, extended the last date once again to June 30, 2024. But don’t wait for the last date to update nomination details in all financial documents. It is to prevent complications in claim settlement for the family in case of accountholder’s death. Failing to update or provide the nominee details will lead to the freezing of mutual fund folios.

ALSO READ: Mutual Fund Nomination Deadline Ends On Dec 31: Don’t Wait Till The Last Day

Bank Locker Agreement

The Reserve Bank of India (RBI) revised the model locker agreement in January this year and set December 31, 2023, as the last date to execute the contract with the bank. Under the revised rule, a bank is not liable for any damage to the locker or the content due to a natural calamity, but the damage caused by fire, theft, burglary, building collapse, or fraud by an employee, etc., is the bank’s liability and will accordingly compensate.

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