In-hand salary of employees may decrease from next financial year, this new rule is going to be implemented

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In-hand salary of employees may decrease from next financial year, this new rule is going to be implemented

There are two important news stories for salaried employees. One good and one bad. The good news is that from next financial year, more amount will be deposited in the PF account of the employees, due to which they will get a large amount after retirement. Another bad news is that it may reduce the salary they get in-hand. Actually, the government had passed the Wage Code in Parliament last year. It will come into force from the next financial year.

The implementation of this wage code will directly affect the employees of the private sector. Let us know what is special in this wedge code. According to the new wage code, all types of allowances to employees cannot exceed 50 percent of the total salary or CTC. This means that 50 percent of the total salary or CTC of the workers will be basic salary.

Currently, most companies make up a large part of the total CTC of employees with allowances and lower basic salary. To comply with the new wage code, companies will have to increase the basic salary in the total salary of the employees and limit the allowances to 50 percent. The direct effect of this will be that the amount going to the PF account of the employees will increase.

At the same time, in-hand salary or take-home salary received by employees will decrease. Even with this new rule, employees may get less in-hand salary, but their retirement benefits will increase and they will get a better social security.