TOP 6 Financial Changes from May 1: From Banking Rules to Mutual Funds & STT All You Need To Know

Many major financial changes are coming into effect from May 1, impacting everything from your bank transactions and UPI payments to mutual fund investments, F&O trading, and even salary structures.These updates are aimed at improving transparency, tightening compliance, and reducing speculative activity across financial markets.

Banking & Digital Payments Rules

From May 2026, banks have strengthened security measures by making two-factor authentication (2FA) more stringent. This means users may experience more frequent OTP, PIN, or biometric verification while using UPI, debit cards, and net banking services.

Another key change is related to ATM withdrawals.Cardless cash withdrawals via UPI will now be counted within monthly free transaction limits. Once these limits are exceeded, users may be charged between Rs. 17 and Rs. 21 per transaction.

Additionally, PAN rules have been updated. Instead of tracking daily thresholds, PAN will now be mandatory for individuals whose total cash transactions exceed Rs. 10 lakh in a financial year, marking a shift towards annual monitoring.

SEBI Mutual Fund Overhaul: Biggest Change in 30 Years

The major reform comes from the Securities and Exchange Board of India, which has introduced a complete overhaul of mutual fund regulations, the first major update since 1996.

New Cost Structure Introduced

The earlier Total Expense Ratio (TER) has been replaced with a more transparent system. Now, investors will see Base Expense Ratio (BER) charged by fund houses and additional costs such as brokerage, GST, STT, and stamp duty separately

This change improves cost visibility. Also, expense limits have been slightly reduced, equity funds now capped around 2.10% and debt funds around 1.85%.

SEBI has discontinued categories like Children's Funds and Retirement Funds. These schemes will no longer accept new investments and will gradually merge with other schemes.

A new category called Life Cycle Funds has been introduced. These funds automatically shift from high-risk equity to safer debt instruments as they approach maturity, making them suitable for long-term investors.

SEBI has raised minimum equity exposure requirements from 65% to 80% for several categories to ensure funds stay aligned with their investment objectives.

Gold & Silver Allowed in Equity Funds

Equity mutual funds can now invest up to 35% in gold and silver ETFs, allowing better diversification and hedging against market volatility.

STT Hike on F&O Trading

In order to curb excessive speculation, the government has increased Securities Transaction Tax (STT). On futures from 0.02% to 0.05% and on options STT has been increased from 0.1% to 0.15% (on premium). This change is expected to reduce high-frequency speculative trading in derivatives.

Sovereign Gold Bond (SGB) Tax Rules Change

Tax benefits for Sovereign Gold Bonds have been revised. Now:

Tax-free maturity benefits apply only to original subscribers
Investors buying SGBs from the secondary market will have to pay capital gains tax
This could impact investor interest in secondary market SGB purchases.

Labour Code May Impact Salaries

States like Uttar Pradesh are preparing to implement new labour codes, which may change salary structures. A higher share of basic salary could lead to:

increased PF contributions
lower take-home salary
unchanged total CTC
This is expected to affect both employees and employers.

LPG Prices Likely to Be Revised

Oil marketing companies are expected to revise LPG cylinder prices on May 1, as part of their monthly adjustment cycle. With Brent crude hovering near $111 per barrel, any price change could directly impact household expenses.