How Millennials And Gen Z Would Benefit from the Union Budget 2023-24

The Union Budget is a vital instrument for the Government in reaching out to the electorate. This includes the nation's youth, also known as millennials and Gen Z, who are either newly added taxpayers or potential taxpayers who will join the league in the following 12-18 months.

The younger generation is upbeat and spontaneous; they have played a major role in the development of digital lending, UPI, fintech and other revolutions in India by participating effectively. Their spending power can be attributed to professional advancement, international exposure, and higher discretionary income.

Millennials and Gen Z have distinct spending and consumption pattern, as well as a distinct approach to money management; the majority of them spend money on expensive items such as the latest iPhone in the market or frequent luxury vacations to maintain their social status and satisfy their need for instant gratification. However, with increased awareness in recent years and financial challenges in the past due to unforeseen circumstances such as the pandemic. Millennials and Gen Z today practise delayed gratification and actively manage their finances. Young investors are becoming more involved in various investment avenues, such as mutual funds.

Having said that, young working professionals are dealing with high inflation, job insecurity as a result of recessionary patterns in developed countries, and declining employment prospects. The younger generation anticipated the Budget 2023-24, particularly in terms of initiatives aimed towards their development. Many individuals from this generation have gained an entrepreneurial spirit as a result of the startup culture. These millennials require an economic environment that promotes world-class educational infrastructure, job growth, startup incentives, and a solid tax system. In a nutshell, the country's youthful working population anticipated that this year's budget would solve their financial concerns in the post-pandemic era.

The Union Budget 2023-24 is the present government's final full-year budget, and many consider it to be a populist budget. While Finance Minister Ms Nirmala Sitharaman's budget speech for 2023-24 has ideas for everyone - businesses, salaried class, tribal groups, senior citizens, and the middle class, let us see what is in it for the empowerment of the youth of the nation.

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Here's a list of things that the Union Budget 2023-24 offers to Millennials and Gen Z:

1. Amendments in the New Tax regime for FY 2023-24

• Increase in basic tax exemption limit to Rs 3 lacs from Rs 2.5 lacs earlier

  The Government, in a bid to make the New Tax Regime more effective for taxpayers, increased the basic exemption limit to Rs 3 lacs which was Rs 2.5 lacs earlier. An individual earning an annual income < Rs 3 lacs is exempt from paying tax only under the New Tax Regime. It is applicable to taxpayers across all age groups, whether salaried or senior citizens etc.

  Table: Revised tax slabs and rates for New Tax Regime for FY 2023-24 and AY 2024-25

  Income Tax slabs (Old Tax Regime)	Tax Rate for FY 2023-24	Income Tax slabs (New Tax Regime)	Tax Rate for FY 2023-24
  Up to Rs 2.5 lacs	Exempt	Up to 3 Lacs	Exempt
  Rs 2.5 to 5 lacs	5%	Rs 3 to 6 lacs	5%
  Rs 5 to 7 lacs	20%	Rs 6 to 9 lacs	10%
  Rs 7 to 10 lacs		Rs 9 to 1 lacs	15%
  Rs 10 to 12 lacs	30%	Rs 12 to 15 lacs	20%
  Rs 12 to 15 lacs		Above Rs 15 lacs	30%
  Above Rs 15 lacs




• The income tax rebate under Section 87A has been increased from Rs 5 lacs to Rs 7 lacs

  Section 87A of the Income Tax Act offers a rebate on the taxable income amount of salaried individuals, which includes a majority of millennials and Gen Z taxpayers. Currently, salaried individuals with a total annual income of less than Rs 5 lacs can claim for a rebate under Section 87A on the taxable income amount and not pay any income tax. The maximum rebate limit is up to Rs 12,500 under Section 87A of the Income-Tax Act.

  However, as per the budget proposal, there is an increase in the rebate, and the threshold of total income has been hiked from the current Rs 5 lacs to Rs 7 lacs under the New Tax Regime. Thus, those millennials and Gen Z earning total annual income of up to Rs 7 lacs will not pay any income tax, and a maximum rebate of up to Rs 25,000 under Section 87A of the Income-Tax Act is allowed. This will come into effect at the beginning of FY 2023-24. It provides young taxpayers with an opportunity to save more surplus in their hands and utilise it for investment purposes.

2. National Apprenticeship Promotion Scheme

NAPS was launched in August 2016 by the Government of India to promote apprenticeship in the country by providing financial incentives, technology and advocacy support. The main objective of the scheme is to promote apprenticeship training and to increase the engagement of apprentices.

The finance minister announced in her Budget speech that a direct benefit transfer (DBT) pan-India National Apprenticeship Promotion Scheme will be rolled out under which stipend will be provided to 47 lakhs youth in three years.

3. Emphasis on Enhancing Financial Literacy

With a view of making the youth financially literate and more financially aware, the Government has proposed various measures to skill lakhs of youth within the next 3 years. A digital skill ecosystem will be set up under the name of Skill India Digital Platform. Finance Minister said that under the Pradhan Mantri Kaushal Vikas Yojana: they will provide On-job training, industry partnership, and alignment of courses with the needs of industry 4.0 will be emphasised. To skill the youth for international opportunities, 30 Skill India International Centres will be set up across different states. The Government also proposed SEBI to develop and regulate education in NISM and award degrees, diplomas and certificates to boost financial literacy for better employability.

4. Impetus to Artificial Intelligence

To boost AI in India, the Government proposed to set up 3 centres of excellence for artificial intelligence (AI) in the country and train lakhs of youth in coding, drones, AI, robotics, etc., over the next three years. The PMKVY will also cover new-age courses for Industry 4.0, like mechatronics, IOT, 3D printing, drones, and soft skills.

5. Startup And MSME Sector Jobs

The startup culture is quite popular amongst young professionals, and the Government has put some light on it during the Budget 2023-24 announcements. To promote job creation, especially in the startups and MSME ecosystem, the FM has given several reliefs. The Government has allotted Rs 283.5 crore for the Startup India Seed Fund Scheme and extended tax holidays for startups till March 2024. MSMEs, too, got Rs 9,000 crore corpus for revamped credit guarantee scheme to promote financial inclusion and employability growth amidst the massive layoffs in the startup sector.

6. Simplification of the ITR Filing Process

The Union Budget 2023-24 recommended shortening the processing time and making it easier to file Income Tax Returns (ITR). The finance minister stated that the Government intends to reduce ITR processing time from 93 to 16 days and to establish a grievance redressal forum in order to simplify ITR filing in the country.

A straightforward common-income tax return form for all taxpayers will also be made available soon. Such simpler ITRs will make it easier for Millennials and Gen Z to file their returns and improve with their tax planning.

As an assessee, you have the option to choose between the Old Tax Regime and the New Tax Regime while filing your ITR in a financial year. Individuals should compare their taxability under both tax regimes, your decision to choose the best suitable tax regime should be based on a variety of factors such as current income level, income structure, exemptions and deductions you are eligible for, etc. Opt for the tax regime that offers optimal tax savings.

[Read: Old or New Tax Regime - Which is Beneficial for You Post the Union Budget 2023-24 Announcements]

The finance minister Ms Nirmala Sitharaman emphasised seven priorities during her speech. During the Amrit Kaal, these seven priorities were referred to as 'Saptarishi' because they complemented one another. They include development, reaching the last mile, infrastructure, releasing potential, green growth, young power, and financial sector enhancement.

To conclude...

The amendments in the new tax regime will likely put more disposable income in the hands of young taxpayers (millennials and Gen Z) due to lower tax outgo. This may drive you to splurge on products to satisfy your need for quick gratification, which may result in a lack of savings and investment, affecting your future financial goals. As a result, it is critical that you consider using the surplus wisely and making smart investment plans in suitable financial instruments aligned to your financial goals.

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MITALI DHOKE is a Research Analyst at PersonalFN. She is an MBA (Finance) and a post-graduate in commerce (M. Com). She focuses primarily on covering articles around mutual funds including NFOs, financial planning and fixed-income products. Mitali holds an overall experience of 4 years in the financial services industry.

She also actively contributes towards content creation for PersonalFN’s social media platforms in the endeavour to educate investors and enhance their financial knowledge.