Tax Exemption Announcement and Its Implications for Gen Z Consumption

Following the budget announcement regarding tax exemptions for individuals earning up to Rs 12 lakh, CRED’s CEO Kunal Shah emphasized the potential effect of this decision on consumer expenditure, especially among Generation Z.

In response to Union Finance Minister Nirmala Sitharaman’s Budget 2025 speech, Shah expressed his views on X (previously known as Twitter), stating that the updated income tax limits might lead to a significant increase in Gen Z’s spending habits.

Shah’s commentary implies that the increase in disposable income is likely to encourage younger consumers to spend more across various sectors such as technology, travel, dining, and lifestyle products.

New income tax limits could cause big jump in Gen Z consumption spends.

Public Reactions

Shah’s post rapidly gained popularity, amassing over 380K views and igniting conversations among users online.

A number of individuals resonated with Shah’s perspective, highlighting the favourable consequences for the economy and startups. Comments included:

• “Good for D2C startups,” one user remarked.
• “Good for the economy,” said another.
• “New tax policies can significantly influence consumer behaviour, particularly among younger generations who prioritise spending on experiences and technology,” another user expressed.
• “This also made annuity and hence NPS more appealing. With consumption on the rise, one hopes that some funds are directed towards building a retirement corpus,” a fourth noted.

Insights shared on social media highlighted the anticipated impact of lower tax brackets on Gen Z’s disposable income and subsequent consumer habits:

Lower tax slabs mean higher disposable income for Gen Z, leading to a surge in consumer spending on tech, travel, and lifestyle, boosting India’s consumption-driven economy.

More disposable income = higher discretionary spending. Expect spikes in tech, travel, and lifestyle sectors.

No doubt about it. Gen Z’s mindset is distinct; they embrace a consumption economy rather than a saving economy, in contrast to previous generations.

Kunal Shah: An Overview

Kunal Shah is a prominent Indian entrepreneur renowned for establishing FreeCharge and CRED. He was born on May 20, 1983, in Mumbai, and holds a Bachelor of Arts in Philosophy from Wilson College. Shah briefly pursued an MBA at the Narsee Monjee Institute of Management Studies (NMIMS) but departed to concentrate on his entrepreneurial pursuits.

In 2010, Shah co-founded FreeCharge, a digital service that enabled users to pay bills and recharge online. The platform was acquired by Snapdeal in 2015.

In 2018, he introduced CRED, a fintech application that rewards users for prompt credit card bill payments. Apart from his entrepreneurial ventures, Shah is an active angel investor, having supported over 200 startups, including well-known names like Razorpay and Unacademy.