Understanding the Financial Year
A financial year is a 12-month period used by governments, businesses, and individuals for accounting and tax purposes. It helps in maintaining financial records, filing taxes, and planning budgets efficiently. In India, the financial year starts on April 1 and ends on March 31 of the following year. The financial year 2025-26 will begin on April 1, 2025, and end on March 31, 2026.
For businesses, this period is crucial for preparing annual reports, calculating profits, and paying taxes. Similarly, individuals must submit their income tax returns within the deadlines set by the government. The fiscal year also serves as a timeline for implementing new policies, budget allocations, and economic reforms. Every year, several financial and banking changes take effect on April 1, impacting businesses and individuals alike.
List of Major Changes in the Banking and Financial Sector (Effective April 1, 2025)
1. New UPI Rules
The government and banks have introduced a new rule regarding UPI transactions linked to inactive mobile numbers. If a mobile number associated with a UPI ID has been inactive for a long time, the UPI ID will automatically be deactivated. This change is aimed at enhancing security, preventing fraud, and ensuring that inactive accounts do not become targets for cybercrime.
What should users do?
- Ensure their registered mobile number is active.
- Update their number with the bank if they have changed it recently.
- Keep track of UPI transactions and notify the bank of any discrepancies.
2. ATM Withdrawal Charges
Customers will now have to pay a fee for ATM withdrawals beyond a certain limit. As per the new rule:
- Banks will allow up to three free withdrawals per month from ATMs.
- A charge of Rs 20-25 per withdrawal will be applied after exceeding the free limit.
- This move is aimed at reducing excessive cash withdrawals and encouraging digital payments.
Impact on Users:
- Increased reliance on online transactions and UPI payments.
- Need for better cash management to avoid unnecessary withdrawal charges.
3. Minimum Account Balance Requirement
Banks are updating their minimum balance requirements for savings accounts. Customers who do not maintain the minimum required balance may face penalty charges.
How to Avoid Penalties?
- Check with your bank regarding updated minimum balance rules.
- Maintain the required balance to avoid fines.
- Consider shifting to accounts with zero-balance features if available.
4. Enhanced Digital Banking Services
Banks are rolling out new AI-powered chatbots and digital banking services to improve customer experience. These services will:
- Offer instant customer support via mobile and online banking platforms.
- Provide enhanced security features to reduce the risk of fraud.
- Allow users to perform banking activities more efficiently without visiting branches.
Benefits for Customers:
- Faster resolution of queries.
- Improved security for digital transactions.
- Increased convenience in accessing banking services remotely.
5. New Credit Card Rules
Several banks are modifying their credit card benefits. From April 18, 2025, customers using SBI and IDFC First Bank’s Vistara credit cards will lose perks such as:
- Free flight ticket vouchers.
- Milestone rewards.
- Renewal benefits.
Axis Bank will also implement similar changes to its Vistara credit card benefits.
Advice for Cardholders:
- Review changes in rewards and benefits.
- Compare with other credit cards offering better perks.
- Decide whether to continue with the existing card or switch to another option.
6. GST-Related Changes
To curb tax evasion and improve compliance, the government has made Multi-Factor Authentication (MFA) mandatory for taxpayers using e-way bills and e-invoices.
Why is this important?
- It adds an extra layer of security to the GST system.
- Reduces the risk of fraud and unauthorized transactions.
- Ensures only genuine taxpayers can access and use GST-related services.
How to Prepare?
- Businesses should set up MFA for GST accounts.
- Taxpayers should ensure they comply with the new security protocol.
7. Positive Pay System (PPS) for Cheques
To reduce banking fraud, the Positive Pay System (PPS) will now be mandatory for cheques above Rs 5,000.
What is PPS?
- Customers need to verify key cheque details (cheque number, date, beneficiary name, amount) before processing the payment.
- This system helps prevent fraudulent transactions and unauthorized alterations.
Steps for Users:
- Ensure accurate cheque details are provided before issuing.
- Use bank portals to confirm cheque details before submission.
8. Changes in Savings Account and Fixed Deposit (FD) Interest Rates
Several banks have revised interest rates for savings accounts and fixed deposits.
What’s Changing?
- Interest rates on savings accounts and FDs will vary based on deposit amounts.
- Banks may offer higher interest rates for long-term deposits.
- Customers with higher savings may benefit from tiered interest rates.
How to Benefit?
- Compare FD rates across different banks before investing.
- Consider long-term FDs to maximize returns.
- Review savings account interest rates to optimize earnings.
Conclusion
The new financial year 2025-26 brings significant changes in banking regulations, digital banking, credit card rules, and GST compliance. These updates will impact both individuals and businesses. Staying informed about these changes will help customers avoid penalties, optimize their banking habits, and ensure financial security.
Key Takeaways:
✅ Keep mobile numbers updated for seamless UPI transactions. ✅ Plan ATM withdrawals wisely to avoid extra charges. ✅ Maintain the required minimum balance to prevent penalties. ✅ Leverage digital banking services for secure and convenient transactions. ✅ Review credit card benefits and consider better alternatives if needed. ✅ Ensure compliance with the new GST security measures. ✅ Use the Positive Pay System for cheque transactions above Rs 5,000. ✅ Compare savings and FD rates to maximize interest earnings.
By staying proactive, individuals and businesses can navigate the new financial landscape effectively and make the most of these changes.
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