Union Budget 2023: Benefits for Young Graduates
Union Budget 2023: Benefits for Young Graduates
The Union Budget is an important tool for the government in communicating with the population. This comprises the country’s young, commonly known as millennials and Generation Z, who are either new taxpayers or potential taxpayers who will join the league in the next 12-18 months.
The younger generation is optimistic and impulsive; they have effectively participated in the creation of
- digital lending,
- fintech, and
- other revolutions in India.
Professional growth / foreign exposure / increased discretionary income all contribute to their purchasing power.
Millennials and Generation Z have distinct spending and consumption patterns, as well as distinct approaches to money management; the majority of them spend money on expensive items such as the latest iPhone or frequent luxury vacations to maintain their social status and satisfy their need for instant gratification. However, with growing awareness in recent years and previous financial issues due to unanticipated situations such as the pandemic. Today’s Millennials and Generation Z practice delayed gratification and actively manage their finances. Young people are increasingly interested in alternative investment vehicles such as mutual funds.
Nonetheless, young working professionals face rising inflation, job instability as a result of recessionary tendencies in industrialized nations, and dwindling employment possibilities. The younger generation was looking forward to the Budget 2023-24, particularly efforts directed at their development. As a result of the startup culture, many people in this age have developed an entrepreneurial spirit. These millennials need an:
- economic climate that supports world-class educational infrastructure,
- employment development,
- startup incentives, and
- a stable tax system.
In a nutshell, the country’s young working population expected this year’s budget to alleviate their financial worries in the post-pandemic period.
The Union Budget 2023-24 is the current government’s final full-year budget, and many regard it as populist. While Finance Minister Nirmala Sitharaman’s budget speech for 2023-24 contains plans for everyone:
- salaried class,
- tribal groups,
- old citizens, and
- the middle class
let us see what it has in store for the nation’s young empowerment.
The Union Budget 2023-24 includes the following benefits for Millennials and Generation Z:
1. Changes to the New Tax Regime for Fiscal Years 2023-24
- The basic tax exemption ceiling has been raised from Rs 2.5 lacs to Rs 3 lacs.
In order to make the New Tax Regime more efficient for taxpayers, the government increased the basic exemption ceiling to Rs 3 lacs from Rs 2.5 lacs before. Only under the New Tax Regime is a person earning Rs 3 lacs a year free from paying tax. It applies to all taxpayers, regardless of age, whether salaried or senior people.
The Section 87A income tax refund has been enhanced from Rs 5 lacs to Rs 7 lacs
Section 87A of the Income Tax Act provides a refund on taxable income for salaried persons, which comprises the vast majority of millennials and Gen Z taxpayers. Salary earners with a total yearly income of less than Rs 5 lacs can now seek a rebate under Section 87A on the taxable income amount and avoid paying income tax. Section 87A of the Income-Tax Act allows for a maximum refund of Rs 12,500.
However, according to the budget plan, the refund has been increased, and the overall income threshold has been raised from Rs 5 lacs to Rs 7 lacs under the New Tax Regime. Thus, millennials and Gen Z earning a total yearly income of up to Rs 7 lacs are exempt from paying income tax, and a maximum refund of Rs 25,000 is provided under Section 87A of the Income-Tax Act. This will take effect at the start of the fiscal year 2023-24. It gives young taxpayers the option to preserve more surplus money and put it to use for investment.
2. National Apprenticeship Promotion Program
The Government of India introduced NAPS in August 2016 to encourage apprenticeship throughout the country by offering financial incentives, technology, and advocacy assistance. The scheme’s major goal is to encourage apprenticeship training and boost apprentice involvement.
In her Budget address, the finance minister announced the launch of a pan-India direct benefit transfer (DBT) National Apprenticeship Promotion Scheme, which will pay stipends to 47 lakh youngsters over three years.
3. The emphasis is on improving financial literacy
The government has recommended different initiatives to skill lakhs of youngsters over the next three years in order to make them more financially savvy and informed. Skill India Digital Platform will be the name of a digital skill ecosystem that will be established. According to the Finance Minister, the Pradhan Mantri Kaushal Vikas Yojana would emphasize on-the-job training, industrial partnerships, and course alignment with the demands of industry 4.0. 30 Skill India Foreign Centres will be established across several states to prepare youngsters for international chances. The government also recommended that SEBI construct and regulate NISM education and grant degrees, diplomas, and certifications to improve financial literacy and employment.
4. Artificial Intelligence is gaining traction
To develop AI in India, government suggested establishing three artificial intelligence (AI) centers of excellence in the country and training lakhs of youngsters in coding / drones / AI /robotics / other fields over the next three years. The PMKVY will also cover Industry 4.0 courses such as:
- 3D printing,
- drones, and
- soft skills.
5. Jobs in the Startup and MSME Sector
The startup culture is popular among young professionals, and the government highlighted it during the Budget 2023-24 announcements. The FM has provided many reliefs to encourage employment creation, particularly in the startup and MSME ecosystems. The government has set aside Rs 283.5 crore for the Startup India Seed Fund Scheme and has extended tax breaks for companies till March 2024. In the midst of major layoffs in the startup industry, MSMEs received a Rs 9,000 crore corpus for a redesigned loan guarantee plan to boost financial inclusion and employable growth.
6. Simplifying the ITR Filing Procedure
The Union Budget 2023-24 proposed reducing processing time and making it easy to file Income Tax Returns (ITR). In order to streamline ITR filing in the country, the finance minister indicated that the government plans to shorten ITR processing time from 93 to 16 days and establish a grievance redressal forum.
A simple common-income tax return form for all taxpayers will be available soon. Simpler ITRs will make it easier for Millennials and Generation Z to submit their taxes and enhance their tax planning. When completing your ITR for the fiscal year, as an assessee, you have the choice of choosing between the Old Tax Regime and the New Tax Regime. Individuals should examine their taxability under both tax regimes; your choice to select the best applicable tax regime should be based on a number of criteria such as:
- current income level
- income structure
- exemptions and
- deductions available to you, and so on.
Choose the tax system that provides the most tax savings.
During her address, Finance Minister Nirmala Sitharaman emphasized seven themes. These seven principles were called to as ‘Saptarishi’ during the Amrit Kaal because they complimented one another. They include development, getting to the last mile, infrastructure, unleashing potential, green growth, empowering young people, and improving the financial sector.
Due to decreased tax outgo, the new tax regime’s modifications will likely put more discretionary money in the hands of young taxpayers (millennials and Gen Z). This may cause you to overspend on things to meet your desire for instant satisfaction, resulting in a lack of savings and investment and jeopardizing your future financial goals. As a result, it is vital that you examine how to use the excess sensibly and make sensible investment plans in financial instruments that are consistent with your financial goals.