 "From Union Budget 2025 to UPI, big money changes coming in February")
February will bring some big changes to your finances.
Tomorrow (February 1), Finance Minister Nirmala Sitharaman will announce the Union Budget. The Reserve Bank of India is slated to hold the next meeting of its Monetary Policy Committee (MPC) in the first week of February.
The National Payments Corporation of India (NPCI) has also issued a circular regarding a big change to Unified Payments Interface (UPI). And the he Securities and Exchange Board of India (Sebi) has launched a portal.
Let’s take a closer look:
Union Budget 2025
Sitharaman is set to unveil the Union Budget 2025 tomorrow.
Sitharaman could tweak income tax slabs to provide relief to the middle class. Experts also say the government could increase the standard deduction limit from Rs 75,000 to Rs 1 lakh under the new tax regime.
Sitharaman could also say goodbye to the old tax regime or announce that it will be phased out in the future. There are also rumours that a simpler tax system – a Direct Tax Code (DTC) – could be unveiled during the speech.
As per Moneycontrol, investors are also hoping that Sitharaman will return indexation benefits of debt funds which were removed the previous year.
Another item on the taxpayer wish list is increasing deductions on medical expenses under the old tax regime.
As of now, taxpayers can claim a deduction of Rs 25,000 for health insurance premiums for themselves, their dependents and parents.
Senior citizens, on the other hand, can claim up to Rs 50,000.
People also want GST on items such as healthcare policies, ACs, cars reduced to bring relief to the common man.
According to reports, Sitharaman could do away with the old tax regime altogether.
RBI rate cut?
The Reserve Bank is slated to hold its next big meeting from February 5, 2025, to February 7, 2025 – the first chaired by Governor Sanjay Malhotra, an ex-civil servant appointed late last year.
The Central bank’s Monetary Policy Committee (MPC) meets six times a year.
All eyes will be on the RBI to see whether it maintains its policy repo rate.
As per Moneycontrol, the RBI has kept its repo rate unchanged since April 2023.
This after a cumulative 250 basis point hike from May 2022 to February 2023.
The RBI has done so to balance inflation and economic growth.
Some believe a rate cut is in the offing – particularly after the recent moves by the RBI including injecting massive liquidity into the banking system in recent days,
Upasna Bhardwaj, chief economist at Kotak Mahindra Bank, told Moneycontrol, “The liquidity easing measures have increased the likelihood of a repo rate cut in the upcoming February policy.”
Neeraj Gambhir, Group Executive & Head,- Treasury, Markets & Wholesale Banking Products at Axis Bank told CNBC that the actions by the US Federal Reserve will take the pressure off RBI to cut rates.
“The backdrop of a strong US dollar means that we are seeing continuous intervention in the FX market, which means there is an impact on domestic liquidity. In that backdrop, and the fact that our inflation is still somewhat higher…I don’t see a very real case for a policy rate cut in the February meeting at this point in time,” he said.
However, others disagree.
Economists polled by Reuters said the Reserve Bank of India will cut its main policy rate on February 7.
They added that this will be followed by just one more cut next quarter.
The central bank has injected massive liquidity into the banking system in recent days, which some economists take to mean a rate cut is imminent, despite relatively high inflation.
Over 70 per cent of respondents, 45 of 62, in a January 22 to January 30 poll, forecast the RBI would cut its key repo rate by 25 basis points to 6.25 per cent.
“The new governor’s take on growth and currency, unlike his predecessor’s, suggests monetary policy is likely to tilt towards supporting growth rather than continuing to be fearful of inflation,” said Kunal Kundu, India economist at Societe Generale.
“A rate cut is unlikely to lead to a discernible recovery in economic activity…For that to materialise, there would need to be a coordinated approach between monetary (and) fiscal policies.”
UPI change
There is also a change coming to UPI.
As per News18, the National Payments Corporation of India (NPCI) has said that UPI IDs with special characters will stop functioning from February 1.
The NPCI in its circular said IDs special characters such as #, @, $, or * would be blacklisted.
Only numbers and alphabets will be allowed in UPI IDs from February 1.
The NPCI thus urged citizens to update their UPI IDs accordingly.
As per Business Today, there were 16.73 billion UPI transactions in December 2024.
That’s an 8 per cent increase from 15.48 billion transactions in November.
The total value of UPI payments in December was valued at Rs 23.25 lakh crore.
That figure was at Rs 21.55 lakh crore in November.
Indians, on average, carried out 539.68 million UPI transactions every day in December.
That figure was 516.07 million in November.
Sebi to launch portal
Sebi in February will launch a web-based portal for submission of preliminary and final root cause analysis (RCA) reports of technical glitches by stock exchanges and other market infrastructure institutions (MIIs).
The new portal – Integrated Sebi Portal for Technical Glitches (iSPOT) – is aimed at streamlining the reporting process of technical glitches across MIIs as well as creating a centralized repository of technical glitches.
Presently, the MIIs – stock exchanges, clearing corporations and depositories – are required to report information about technical glitches and submit the Root Cause Analysis (RCA) reports to Sebi on a dedicated email ID.
In its circular, the regulator said, “The preliminary and RCA report of technical glitch shall be shared by the MII with Sebi through a dedicated web-based portal of Sebi viz. iSPOT”.
MIIs will need to submit information to the portal from February 3.
With inputs from agencies
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