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Seven Important Money Rules That have Changed in December

Matters concerning tax deadlines, increasing cost of credit card EMIs and rising term insurance premiums are some of the key considerations for this month.

December 10, 2021 / 11:23 AM IST
Representative image

Representative image

In December, there are several money matters for which the rules will change. Here are some key regulatory and operational changes that are likely to affect your financial life.

December 31 is the last date to file your income tax returns

The deadline to file your income-tax returns for the assessment year 2021-22 (financial year 2020-21) is December 31, 2021. But, it is better to start now if you haven’t filed the income tax returns till now. If you have missed reading Moneycontrol’s income-tax filing guide, we’ve put together the five most pertinent aspects of tax filing. We have also answered five frequently asked questions while filing income tax returns.

Term insurance premiums likely to rise from December

Pure protection term insurance premiums are likely to see a spike yet again in December. This time, the jump is likely to be between 25-45 percent on the back of rising reinsurance rates in the global market, say industry watchers. The absolute rate rise could be stark given the low term insurance rates that the country has enjoyed for the last 10 years. This time round, too, the pandemic-driven higher death rate is the culprit. If you need additional term insurance cover, you should not delay the purchase any further.

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EMI purchases via SBI credit cards will become expensive

Effective from December 1, 2021 SBI Cards & Payment Services Private Limited (SBICPSL) will charge a flat processing fee of Rs 99 plus taxes on all equated monthly instalment (EMI) transactions. The company will charge the processing fees for all EMI transactions done at retail outlets and e-commerce websites such as Amazon and Flipkart. These charges are over and above the interest charges for converting the purchase into EMIs. The company informed its customers about the new charge by email. Any transaction done before December 1, with the EMI booking occurring after December 1, will be exempted from this processing fee.

SEBI introduces Potential Risk Class Matrix for debt fund investors

To further empower debt fund investors, the Securities Exchange Board of India (SEBI) has come out with a mechanism that defines the maximum quantum of risk a scheme can take. Effective from December 1, all existing and new debt schemes will be classified in terms of a Potential Risk Class Matrix (PRCM), comprising parameters based on maximum interest rate risk (measured by the Macaulay Duration (MD) of the scheme) and maximum credit risk (measured by Credit Risk Value (CRV) of the scheme).

The existing risk-o-meter captures the actual risk in the portfolio of the bond scheme. However, the portfolio may change over a period and the fund manager may choose to take more risk to increase returns. The new system of PRCM will show how much risk the fund manager can take. This will tell investors  how much risk exists in the portfolio and how much risk the fund manager can take. This should help investors take more informed decisions. Like the risk-o-meter of the scheme, the maximum potential risk of the scheme (PRCM cell positioning) will be mentioned in all scheme related communications to the investors.

Guidelines for investing in silver exchange traded funds (ETFs)

SEBI norms laid down for the silver ETFs will be effective from December 9, 2021. The regulator prescribed that silver ETFs should allocate at least 95 percent of their assets to silver and silver-related exchange traded commodity derivatives (ETCD). Further, fund houses have been told to limit the tracking error to 2 percent and buy physical silver standard 30 kg bars with 99.9 percent purity, confirming to the London Bullion Market Association (LBMA). Fund houses shall benchmark silver ETFs against the price of silver (based on LBMA Silver daily spot fixing price). Expense ratio cannot exceed one percent of the scheme AUM. The silver ETF units will be listed on the stock exchanges. Fund house is told to appoint market makers to ensure ample liquidity on the stock exchanges.

Also read | Silver ETFs to be available soon: But are they worth investing in?

New guidelines for mutual fund employees when directly investing in securities

SEBI had come out with a new framework for investment and trading in securities for employees of Asset Management Companies (AMCs) and trustees of mutual funds. The employees, board members of AMCs and board members of trustees, including access persons, cannot take undue advantage of any sensitive information that they may have about any company or its securities or about AMCs' schemes or their units. The new framework will apply from December 1, 2021. All employees will refrain from profiting from the purchase and sale of any security within 30 calendar days in a personal trading account.

SEBI allows investing unclaimed amounts in overnight schemes

Effective from December 1, SEBI allows the unclaimed redemption and dividend amounts, which are currently allowed to be deployed only in call money market or money market instruments, to be invested in a separate plan of only overnight / liquid/ money market mutual fund scheme floated by mutual funds specifically for deployment of the unclaimed amounts.
Hiral Thanawala is a personal finance journalist with 9 years of reporting experience. Based in Mumbai, he covers financial planning, banking and fintech segments from personal finance team for Moneycontrol.
first published: Dec 1, 2021 10:21 am

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