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How the New Labour Code’s 50% wage rule could cut tax, tweak your monthly take-home pay

Dec 10, 2025, 01:51 PM IST

The New Labour Code 2025 has quietly rewritten how your salary is structured — and the ripple effects can be worth noting. With the new 50% wage rule, PF, NPS and gratuity contributions are set to rise automatically. Depending on how your company restructures your CTC, your tax bill — and even your take-home pay — could look very different.

Labour codes 2025: How your wage structure will change now - check impact on salary structure, PF, tax

Dec 09, 2025, 01:19 PM IST

Under the new framework, wages, comprising basic pay, dearness allowance (DA) and retaining allowance, must account for at least 50% of total remuneration.

Labour codes update: What new gratuity rules mean for fixed-term and contract workers

Nov 28, 2025, 04:38 PM IST

Under the updated framework, wages now include basic pay, dearness allowance and retaining allowance. If allowances exceed 50% of total compensation, the excess will be added back to wages for calculating social security contributions.

New labour laws: How your in-hand salary vs retirement corpus will see a massive shift

Nov 26, 2025, 03:21 PM IST

Tax Buddy founder Sujit Bangar explains that while employees may initially be disappointed to see their net salary fall, the long-term gain is enormous—often to the tune of more than Rs 2.13 crore over a working lifetime. To demonstrate the mechanics of this shift, Bangar outlines a simple illustration.

'₹2.13 crore gain, ₹4,800 loss': Tax expert explains new labour law's impact on your salary

Nov 26, 2025, 07:28 AM IST

For a 30-year-old employee with a ₹12 lakh CTC, monthly PF contributions (from both employer and employee) will rise from around ₹7,200 to ₹12,000. This ₹4,800 monthly increase, when compounded over three decades, translates into a staggering ₹1.24 crore in additional PF savings.

New Labour Law 2025 salary calculator: How CTC of Rs 7 lakh, Rs 10 lakh and Rs 15 lakh will change

Nov 25, 2025, 04:05 PM IST

India’s long-awaited Labour Codes finally came into effect on November 21, 2025, triggering the biggest salary restructuring shift in decades. While these reforms overhaul compliance and employment norms, the most immediate impact is on how companies structure salaries and how much employees take home each month.

Labour codes could increase formalisation of workforce by 15.1%: SBI Ecowrap

Nov 25, 2025, 09:58 AM IST

Following these reforms, India's social security coverage could reach between 80-85 per cent in the next two to three years.

Employees, employers both set to gain from the four labour codes: Teamlease Senior VP Balasubramanian Anantha Narayanan explains

Nov 24, 2025, 03:27 PM IST

"There are 29 labour laws which have been unified into four labour codes. That doesn’t sound astronomically significant but if you dig into one further level of detail, it does," said Narayanan.

New labour law could quietly cut your salary even if your CTC stays the same

Nov 24, 2025, 08:03 AM IST

For employers, the move increases their own statutory burden. A higher basic pay means a higher employer contribution to PF and gratuity. Companies aiming to maintain payroll budgets may restructure pay without increasing total CTC, further impacting employee take-home.

New labour codes: Fixed-term jobs get boost, gratuity in one year, PF access, nationwide social security

Nov 22, 2025, 07:40 PM IST

Under the reforms, fixed-term employees can now receive gratuity after just one year of service—far lower than the traditional five-year requirement that continues for permanent staff.

New labour codes: Take-home pay may dip as PF and gratuity rise under unified definition of wages

Nov 22, 2025, 01:35 PM IST

Currently, PF is calculated at 12% of basic salary. With basic pay and allowances now forming a larger portion of ‘wages,’ mandatory PF contributions will rise without an increase in overall CTC—leading to a likely reduction in take-home earnings.

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