India’s new Labor Codes are going to be implemented from November 21, and they will have a direct impact on your salary structure, CTC, take-home salary, PF, gratuity and tax planning. In this video, we will understand in very simple words how the breakup of your salary will change after the implementation of the New Wage Code. The biggest change has come in the definition of Basic Wages. From now on Basic Salary + Dearness Allowance (DA) + Retaining Allowance — including these three, at least 50% of your total salary will be considered as basic wages. Earlier, companies kept the basic salary at 30-40% and included allowances like HRA, Used to increase conveyance etc., due to which you would get more take-home salary. But under the new rules, allowances cannot now exceed 50% of the total CTC. If the allowances exceed the 50% limit, the extra portion will be added back to the wages (basic). This means – Basic salary will increase, PF and gratuity will increase, long-term benefits will be strong but take-home salary may decrease slightly.
