- By James Kuanal
- Mon, 20 Jan 2020 07:20 PM (IST)
- Source:JND
New Delhi | Jagran Business Desk: Home to the one of the world's largest group of young, employable population, India sees millions of youths join the workforce on an annual basis. Thus there is a need to create ample jobs for the skilled labour. India aspires to add over 100 million secondary educated people in the workforce in next ten years. Keeping this in focus, the government should focus on job creation.
Poor job creation risks worsening the highest unemployment rate in 45 years and built pressure on PM Modi's government that is already batting a slowdown in the economy. More than 12,000 unemployed people committed suicide across the country in 2018, which is more than one person each hour, reported India Today.
The millenials need to be empowered to become financially free. The budget must ensure that adequate measures are introduced to boost MSMEs, startups, as they contribute to job creation in the economy and ensuring financial stability for young generation that is set to enter the workforce in coming years or decades.
Insurance
It plays a vital role in an economy securing future of individuals and organisations. The insurance sector enables a balanced risk transfer and protects the GDP of a country. However, it is underserved and underachieved in India.
A recent report by Lloyd’s of London estimated that India has the second-largest insurance gap in the world of USD 27 billion after China which has an insurance gap of over USD 76 billion.
Tax changes
The budget may bring changes to corporate tax and income tax slabs, which could be suitable for millenials who aspire to live their life to the fullest at a very young age.
Cut Stamp Duty on Term Plans
Simultaneously, the burden of buying a Term Plan must be lessened by reducing the Stamp Duty on the same.
Increase tax exemption on Term Plans
As of now, the maximum tax exemption, provided under Section 80C of the IT Act is Rs 1.5 lakh. A separate rebate to buy term plans would surely help many under-insured to secure themselves. The step would help the youths who are joining the national workforce to cost-effectively avail a life insurance plan.
Tax-free annuities
According to current tax implications, only 1/3 of the corpus that is distributed to the retiree by the pension plan is tax-free. The remaining is distributed as annuity (long-term investment) and is subject to taxation. Annuities are taxed in such a way that the principal amount also gets taxed.
The finance ministry must use this Budget as an opportunity to encourage financially sound retirement plans by making all annuities tax-free.