Zerodha’s Nithin Kamath proposes tweaking tax law in Budget 2024 to tackle unemployment; here’s what he says

Zerodha founder and CEO Nithin Kamath believes encouraging entrepreneurship can be an effective remedy to the issue of structural unemployment among youth in India, and for this, the government should tweak Section 54F of the Income Tax Act, which offers tax exemptions on the capital earned from the sale of any asset if the proceeds are reinvested in a residential property.

Sharing his view on social media platform X (formerly Twitter), Kamath wrote that structural unemployment among youth is one of the biggest challenges of the Indian economy, and part of the solution is to do everything to encourage entrepreneurs, even in small towns and villages in India.

He further wrote that he hopes the upcoming Union Budget 2024 addresses Section 54F of the Income Tax Act, which offers tax exemptions on capital gains from the sale of any asset if reinvested in residential property.

He wrote including investments in startups alongside residential property could make startup investing more popular. Although some may misuse the law, the potential benefits far outweigh the risks.

"One of the things I hope the Budget addresses is section 54F. This section offers tax exemptions on the capital gains earned from the sale of any asset if the proceeds are reinvested in a residential property. Including investments in startups along with investments in residential property can make startup investing mainstream. Even though some people may misuse the law, the potential upside is infinitely greater and worth the minor risk," Kamath wrote on X.

Kamath was highlighting the issue of structural unemployment among youth which is one of the biggest challenges for the Indian economy. He pointed out that economic growth will remain uneven unless this situation improves.

“Encouraging entrepreneurs, especially in small towns and villages, is part of the solution. Since venture capitalists won't go to these areas, wealthy individuals are the best hope for support,” Kamath said.

Recently and RBI data revealed that India added 4.67 crore jobs in FY24 and the country’s employment grew by 6 per cent in FY24 from 3.2 per cent in FY23.

However, the quality of jobs and the lack of employment in the formal sector remain challenges for the country.

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