Big Financial Changes Coming in February 2025: Budget, RBI, and More!

February is set to bring several important updates in finance, from the Union Budget to changes in banking services and UPI rules. Here’s a summary of what to expect and how these changes may impact you:

Union Budget 2025: What To Expect For Your Finances Ahead Of Nirmala Sitharaman Speech

Finance Minister Nirmala Sitharaman will present the Union Budget on February 1, 2025. Several announcements are expected that could impact your taxes and savings:

• Higher Basic Exemption Limit: There are talks of raising the basic exemption limit from ₹3 lakh to ₹10 lakh, which would reduce the tax burden for individuals.
• New Tax Slab: A proposal for a new 25% tax slab for incomes between ₹15 lakh and ₹20 lakh is on the cards, potentially easing the tax load on middle-income earners.
• Increase in Standard Deduction: Tax consultants suggest increasing the standard deduction to ₹1 lakh, up from ₹75,000, which would help people deal with rising living costs.
• Restoring Indexation for Debt Funds: Investors hope the Budget will restore the tax benefits on debt funds that were removed last year.
• Health Insurance Deductions: Taxpayers are hoping for higher deductions under Section 80D for health insurance premiums and medical expenses, considering the rising healthcare costs.

Will the RBI Cut Repo Rate?

The Reserve Bank of India (RBI) has kept the repo rate steady at 6.5% for the past 11 policy meetings. Economists believe that a rate cut is likely in February, thanks to:

• Lower Inflation: Inflation dropped to 5.22% in December, down from 5.48% in November, driven by reduced food prices.
• Economic Growth: Slower-than-expected growth has added to the chances of a repo rate cut.
• Liquidity Measures: The RBI injected liquidity into the system in January, which has further fueled hopes of a rate cut.

Kotak Mahindra Bank Updates

Starting February 1, Kotak Mahindra Bank will make changes to its savings accounts, particularly for Kotak811 account holders:

• ATM Withdrawal Limit: The free daily ATM withdrawal limit will be increased from ₹10,000 to ₹25,000.
• Higher Fees: The bank will hike its charges for services like RTGS, NEFT, and chequebooks. For example, RTGS fees for transactions between ₹2 lakh and ₹5 lakh will increase from ₹20 to ₹40.
• New Charges for NEFT: The bank will now charge ₹4 for NEFT transactions up to ₹2 lakh (previously ₹2 for transactions up to ₹10,000).

Changes in UPI Transaction Rules

The National Payments Corporation of India (NPCI) will enforce new rules from February 1, 2025. UPI transactions with special characters in transaction IDs will be rejected. All UPI IDs must be alphanumeric to comply with the new regulations. Make sure to update your payment apps to avoid transaction issues.

Start Your Tax Planning Early

With the financial year ending in 2 months, it’s time to start your tax planning. Avoid the rush by focusing on investments like the Public Provident Fund (PPF), National Pension Scheme (NPS), and Equity Linked Savings Schemes (ELSS). Regular investments can help you save taxes and meet your financial goals.

SEBI Launches Portal for Reporting Technical Glitches

The Securities and Exchange Board of India (SEBI) has launched a new portal, iSPOT, to help market infrastructure institutions (MIIs) like stock exchanges report technical glitches. This will improve the traceability of issues and ensure better data quality. The portal will be in operation from February 3, 2025.

By staying informed about these updates, you can make smarter financial decisions in February.

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Investments in the securities market are subject to market risks, read all the related documents carefully before investing.