5 Things That'll Cost You More In The New Financial Year - Outside View by PersonalFN

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5 Things That'll Cost You More In The New Financial Year
Apr 5, 2017

It's an appraisal time!

Aren't you eagerly waiting to know the increment you will receive this year?

Well, you earn more or the same, expenses always creep up.

Heads might change, though.

Let's look at what will cost us more in the Financial Year (FY) 2017-18...

Healthcare, Car and Motorcycle insurance premium to go up

The IRDA (Payment of Commission or Remuneration or Reward to Insurance Agents and Insurance Intermediaries) Regulations, 2016, have become applicable from April 01, 2017. As a result of this, non-life insurance companies will have to revise the remuneration programme for intermediaries. Moreover, they will launch reward schemes as well. These cost escalations would be passed on to the insurance buyers. However, the Insurance Regulatory and Development Authority (IRDA) has capped hike in the premium to 5% of the current policy premium. Besides, the insurance companies will have to issue a certificate stating that there is no detrimental change either in the premium or in the policy terms.

Banking Services will cost you more

In the aftermath of demonetisation, several private sector banks and a few public sector banks have revised terms and conditions of their services. HDFC Bank, ICICI Bank, Axis Bank, and SBI have done a major rejig in the fee structure. SBI has hiked the minimum balance requirement from Rs 1,000 to Rs 5,000. While its private sector counterparts will soon charge you a higher fee for branch banking transactions. Moreover, a bank debit card may cost you as high as Rs 950 p.a. and your bank may charge you Rs 600 excluding taxes for non-maintenance of minimum balance.

Now it remains to be seen if other banks will follow suit and raise transaction charges across the spectrum of services.

A whole host of other services may become expensive too

Goods and Services Tax (GST) is likely to be implemented from July 01, 2017. Although the tax rates haven't been announced yet, it looks like services will become dearer once the GST is implemented. Dining out, booking cabs, and watching movies will cost you more in FY 2017-18.

Delay in filing Income Tax (I-T) return will attract penalty

If you miss the deadline of July 31 for filing I-T returns, you will have to pay a penalty of Rs 5,000 for any delay upto December 31. However, if you don't file until then, later the amount of penalty will rise to Rs 10,000. The Government has given some respite to taxpayers with income upto Rs 5 lakh. For such assessees, the late fee would be restricted to Rs 1,000.

Big-ticket cash deals will make a dent into your vault

As you might be aware, using cash above Rs 2 lakh in any deal whether or not completed in one go is prohibited. Doing so will attract the penalty of the equal amount. For example, a cash transaction of Rs 5 lakh would attract a penalty of Rs 5 lakh on the person accepting it.

And some benefits will be taken away from you in FY 2017-18

You can claim interest paid on the home loan as your negative income from house property, which can be set off against income under other heads. Previously, there wasn't any restriction on the amount one could claim, but now, there will be. Interest paid on the home loan taken to buy a second home will be restricted to Rs 2 lakh for the purpose of a set-off. In other words, buying a property to lease out will become unattractive in FY 2017-18.

PersonalFN recommends that you should make a note of the rise in your expenses as that will affect your discretionary income-something that decides whether or not you would have sufficient money to invest to achieve your financial goals.

Unless your earnings keep pace with the inflation, creating any long term wealth might remain a dream.

Financial planning is a holistic activity that goes much beyond mere investment planning. It touches upon each aspect of your life. If you are seeking the services of a trustworthy financial planner, your search may end here.

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.


The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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1 Responses to "5 Things That'll Cost You More In The New Financial Year"


Apr 6, 2017

Insightful article.

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