New Labor Law: Good news! Under the new labor laws, in-hand salary of employees will increase, will get leave for 3 days in a week, know how
Under the new labor laws, the in hand salary of the employees will increase. After the implementation of the new labor law, what will be the effect on the salary of the employees and how the salary structure will change. To know its complete information, read the full news.
After the implementation of the new labor law, your in hand salary will not decrease but will increase. Now you must have been hearing that after the implementation of the new labor law, your in-hand salary will be reduced in the salary structure. Because the basic salary will be 50%. This will cut more money into the retirement fund. The huge amount of allowances will be reduced.
But we are telling you here that even after the new salary structure comes, your in-hand salary will not decrease but will increase. After the implementation of the new labor law, what will be the effect on the salary of the employees and how the salary structure will change. However, a formal announcement is yet to be made. But, there are speculations that it can be implemented in the coming months.
Basic salary will be 50 percent-
Let us tell you that the government has prepared 4 New Labor Codes by adding 29 labor laws. According to the provisions of the new law, the basic salary will be 50% of the total salary (CTC) in the salary that companies will pay to their employees. This means that the basic salary which used to be 30-35 percent earlier, will be increased by 15 percent directly and the remaining 50 percent will be part of reimbursement-allowance.
What is in the current salary structure?
Suppose your monthly salary is an annual package of Rs 1.5 lakh i.e. Rs 18 lakh. In the current salary structure, the basic salary is 32% of the CTC. In this sense, in the monthly CTC of 1.50 lakh, the basic salary will be Rs 48,000. Then 50 percent i.e. Rs 24,000 HRA then 10% of basic (Rs 48,000) in NPS i.e. Rs 4,800 will go.
If 12% of the basic salary goes to the Provident Fund (PF), then Rs 5,760 will go to the EPF every month. In this way your monthly CTC of Rs 1.50 lakh has become Rs 82,560. This means that the remaining Rs 67,440 is being given through other items. These include components like special allowance, fuel and transport, phones, newspapers and books, monthly share in annual bonus, gratuity.
How much tax is made, how much is the salary in hand and how much is retirement savings?
Out of your total CTC, Rs 1.10 lakh will be taxed. That means 6.14 percent tax of CTC. Take home salary – Rs 1.14 lakh, 76.1 percent of CTC. Retirement savings – Rs 1.96 lakh, totaling 10.9 percent of CTC.
Less tax exemption will be available in HRA-
According to the new rule, suppose the annual basic salary is Rs 9 lakh, then HRA will be Rs 4,50,000. But, you will get tax exemption only on Rs 2,42,400. Meaning tax will have to be paid on Rs 2,07,600. Earlier, you had to pay tax on only Rs 45,600 received under the head of HRA.
There is going to be a huge increase in tax on HRA in the new salary structure. If you compare the tax on annual CTC, now you have to pay tax of 1.10 lakh (6.1% of total CTC), which will be Rs 1.19 lakh (6.6% of total CTC) in the new structure.
Let us tell you that your take home salary will decrease in the new structure, but if you want some option to be taken out, then you have a way. You can leave the NPS, because whether to put or not to put money in it depends on your wish. This is not the case with EPF, in EPF you have to pay 12% of your basic salary.