Short bites to keep you informed of matters that impact your wallet and wealth
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Hey awesome people,
We can’t believe it’s more than 6 months since we started sending you newsletters. We are glad that they have been much appreciated and have established a strong reader base. We can’t thank you enough for that.
There are some changes coming in to the way that you transact online with your debit and credit cards. FInd out more in the Top Bite section
Top Bite this week
Get ready to memorise your card details to continue shopping online
RBI has disallowed online e-commerce companies to store customer’s card information like card numbers and expiry dates on all e-commerce sites💻 from Jan 2022 onwards. This norm kicks in for recurring payments (auto-debits authorized on your card) from Oct 2021 onwards.
Let’s understand what are the effects and why this was done.
Time and again there have been talks about the security of digital transactions. You would remember that RBI has introduced many measures in the past -right from the introduction of chip-based credit cards, the requirement of OTP to complete any transactions to setting transactions limits and blocking your cards for certain transactions. All this has been done to enhance the safety of your cards.
Currently, e-tailers and other payment gateways store your card details for ease of transactions and also to reduce failure of transactions. In addition, these companies use the data on credit & debit cards stored on their servers to pitch certain products/send out relevant product communications to their customers.
What does RBI have to say about storing the data on company servers?
When the credit card data is stored on the individual company servers, it isn’t secure and there are chances of them getting hacked. These kinds of instances have been numerous – Mobikwik, Air India, Big Basket, IRCTC and more.
So, RBI doesn’t want companies to store card details on their servers. But instead, use a token-based system or have customers fill in their 16 digit credit card number and expiry date each time they transact.
A token system means the credit card number is linked to a token that is issued by the card issuer. One token can be used only by a specified merchant. Eg: There could be a different token issued for Amazon, one for Netflix, one for Zomato, and so on.
How does this affect you and me?
This will obviously affect the ease of transactions on e-com sites.
The Payments Council of India has suggested various other methods in place of the token system. They have also asked for an extension of the deadline, but the RBI has reportedly not allowed the extension.
So, will it move a major chunk of transactions towards the UPI method, where the amount is directly debited off your bank account? Or push transactions towards the Buy Now Pay Later operators?
Or will it end increasing your memory power? Let’s wait and watch!
You Ask We Answer😍
Can I use expenses like vehicle loan interest, home loan interest, and insurance premium as deductions from my income while filing an IT return? – Ramesh Meena
Not all of your expenses can be claimed as a deduction while filing your tax return.
There are specific exemptions allowed on interest paid on home loans under Sec 24 of the Income Tax Act. The amount of principal paid on home loan and insurance premium can be shown as deductions under Sec 80C for up to an amount of Rs 1.5L (for all of the deductions under 80C)