December financial alert: RBI rate call, tax deadlines, and credit card updates

If the MPC maintains the status quo on the repo rate on December 6, home loan interest rates and equated monthly installments (EMIs) will remain unchanged.

All eyes are on the Reserve Bank of India’s (RBI) next Monetary Policy Committee (MPC) meeting on December 6, among the major happenings in the financial world next month. The big question is whether the RBI will maintain the status quo or cut the repo rate, which has been held at 6.5 percent. If applicable, you need to pay your third advance tax instalment and file belated tax returns in December to avoid penalties.

Further, Axis Bank is introducing a redemption fee for customers who use EDGE Rewards or Miles and is revising associate charges on credit cards next month. AU Small Finance Bank has also announced changes to its reward point policy for Ixigo AU credit card. So, it’s essential for cardholders to review the revised terms and regulations issued by banks.

Will RBI maintain status quo or cut repo rate?

The RBI kept the repo rate steady at 6.5 percent for the 10th consecutive time in its October MPC review. Notably, the MPC shifted its stance from "withdrawal of accommodation" to "neutral", marking a significant change in approach since May 2022. Economists interpret this move as a sign that the RBI is now poised to act in either direction, depending on future developments. If inflation remains under control, rate cuts may be on the horizon, but for now, the RBI is adopting a cautious wait-and-watch approach.

Most economists expect the RBI to cut the repo rate by 25 basis points in its February meeting, but their confidence is waning due to rising geopolitical tensions, high inflation, and stable growth. A poll of 10 economists conducted by Moneycontrol between November 19 and 21 found that the probability of a rate cut in February 2025 stands at 60 percent.

If the MPC maintains the status quo on the repo rate on December 6, home loan interest rates and equated monthly instalments (EMIs) will remain unchanged, providing borrowers with stability in their financial planning.

Update your Aadhaar for free by December 14: Here's why you should

The Unique Identification Authority of India (UIDAI) has announced that the deadline for free Aadhaar updates is December 14. This initiative allows individuals to update their Aadhaar details, including name, address, and date of birth, online at no cost.

UIDAI recommends updating Aadhaar details if it has been over 10 years since the last update. Keeping your Aadhaar information up to date ensures that your records are current, facilitates seamless access to government and private services, and improves authentication success rates.

After December 14, updates will incur a fee of Rs 50 per request at Aadhaar centres. While updating your Aadhaar is not mandatory, it is highly recommended to ensure accurate authentication, prevent fake identities, and simplify access to services.

Third advance tax instalment due by December 15

As a salaried individual, you may assume that advance tax doesn't apply to you. However, if you earn income from other sources such as interest on deposits, rental income, capital gains, or more, you may be liable for advance tax. It's essential to assess your advance tax liability to avoid any penalties.

As per Section 208 of the Income Tax Act 1961, individuals with an estimated tax liability of Rs 10,000 or more for the financial year must pay advance tax. This applies after considering tax deducted and collected at source (TDS and TCS). Taxpayers must pay their estimated advance tax liability in four instalments, with 75 percent due by December 15. Failure to pay or delayed payments will incur penal interest at 1 percent per month under Section 234C.

Axis Bank to revise associate charges on credit cards

Axis Bank is set to introduce several changes to its credit card fees, effective December 20. As part of these updates, customers can expect a new redemption fee, changes to interest rates, and additional charges for certain transactions.

The bank is introducing a redemption fee for customers who use EDGE Rewards or Miles. The fee will be Rs 99 (plus 18 percent GST) for cash redemptions and Rs 199 (plus 18 percent GST) for transferring points to mileage programs.

This fee will apply to select Axis Bank credit cards, including the Atlas, Samsung Axis Bank Infinite, Samsung Axis Bank, Magnus (including Burgundy variant), and Reserve credit cards. However, Citi-protege cards such as the Axis Bank Olympus and Horizon will be exempt from this change.

The bank has revised several fees associated with its credit cards. For instance, the monthly interest rate will increase to 3.75 percent. Additionally, a 2 percent fee (minimum Rs 500, no upper limit) will be charged for auto debit reversals and cheque returns, and Rs 175 for cash payments made at branches. Furthermore, a penalty of Rs 100 will be applied if the minimum amount due remains unpaid for two consecutive cycles. Other revised fees include a 1.5 percent dynamic currency conversion markup, a 1 percent fee on rent transactions (with no cap), and a 1 percent fee on education payments made via third-party apps (exemptions apply for direct payments to educational institutions).

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Ixigo AU credit card reward point usage gets a revamp

AU Small Finance Bank has announced changes to its reward point policy for Ixigo AU credit card, effective December 22. As part of this update, cardholders will no longer earn reward points on certain transactions, including educational, government, rent, and Bharat Bill Payment System (BBPS) payments.

Additionally, the bank is introducing a zero percent forex markup on Ixigo AU credit cards, starting December 23. To facilitate this change, the bank will discontinue reward points on international transactions.

Last chance: December 31 deadline to file belated tax returns

If you haven't filed your tax returns yet, December 31, 2024, is the last day to submit revised or belated returns. The original deadline was July 31, 2024. However, filing now will incur a penalty of Rs 5,000. For those with income below Rs 5 lakh, the penalty is lower at Rs 1,000.

In addition to the penalty, you'll also need to pay any outstanding taxes for the financial year 2023-24, along with applicable interest. If you are unable to meet the December 31 deadline due to genuine reasons, you can submit an application to the Income Tax Commissioner to condone the delay in filing your returns.