Regulatory Roundup

Capital Markets

Change: The Securities and Exchange Board of India (Sebi) has issued a draft circular for public consultation inviting feedback on recognising digital platforms as Specified Digital Platforms.

Impact: This measure ensures that such digital platforms are not used for illegal securities-related activities, such as by unregistered entities advertising unauthorised or unsustainable claims regarding securities.

Change: Sebi has released a new framework that targets the often murky ties between unauthorised financial advisors and market intermediaries.

Impact: The rules, announced on October 22, 2024, particularly pin down associations that occur through digital platforms —an area where financial advice has increasingly moved to online mode. The change is expected to bring transparency in the market and safeguard investors’ interest.

Banking

Change: The government has made it compulsory to link Permanent Account Number (PAN) with Aadhaar by December 31, 2024. In case of failure to comply, it would lead to deactivation of PAN leading to challenges in financial planning.

Impact: For inactive PANs, this will significantly impact financial planning, including restricted financial access, delayed refunds, and increased tax deduction rates. If a person fails to do so by the deadline, it will be considered a case of non-compliance, which in turn may lead to a halt in financial services.

Change: State Bank of India (SBI) has raised its marginal cost of funds-based lending rates (MCLR) slightly for select short-term tenures. The hike, set at five basis points (0.05 per cent), for these loan tenures became effective on November 15, 2024.

Impact: This hike will affect interest rates on loans for these tenures, leading to an increase in equated monthly instalments (EMIs) for many borrowers.

Tax

Change: The Income Tax Department on November 17, 2024, cautioned taxpayers that failing to disclose foreign assets or income earned abroad in their income tax return (ITR) could result in a penalty of Rs 10 lakh.

Impact: The department stated: “Failure to disclose foreign asset/income in the ITR can attract a penalty of Rs 10 lakh under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.” The taxpayers falling under this criteria “must compulsorily” complete the foreign asset (FA) or foreign source income (FSI) schedule in their ITR, even if their income is “below the taxable threshold” or the foreign asset was “acquired from disclosed sources”.

Pension

Change: The Employees’ Provident Fund Organisation (EPFO) has introduced a new, centralised pension system.

Impact: Centralised Pension Payments System under this new program allows EPS members to withdraw their pensions from any bank and branch in the country, without moving their Pension Payment Order in case of shifting base.

*List is not exhaustive |Compiled by Tarun Bhardwaj