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The government’s newly implemented Labour Codes—covering Wages, Industrial Relations, Social Security, and Working Conditions—are transforming how salaried Indians earn, save, and pay taxes. The key change lies in redefining “wages.” Under the new rule, basic pay must form at least 50% of total salary, bringing greater transparency across PF, gratuity, and NPS calculations.
While this may reduce your monthly take-home pay, it strengthens your long-term financial health. A higher basic salary automatically raises contributions to EPF or NPS, improving tax efficiency. For those under the New Tax Regime, the employer’s NPS share (up to 10% of salary) remains deductible, while those under the Old Regime enjoy higher Section 80C benefits through PF contributions.
For instance, an employee with a ₹10 lakh CTC might see reduced monthly cash flow but a significant rise in retirement savings. These contributions grow tax-free, helping build a secure, stable future.
HR teams, meanwhile, must realign payroll systems and disclose retirement contributions transparently. Employees should verify revised salary structures to ensure compliance and maximise benefits.
Overall, the new Labour Codes strike a balance—less instant cash but greater tax savings, disciplined wealth creation, and stronger protection for India’s growing workforce.
