New Wage code latest news: With the implementation of the New Wage code, the thing in the mind of most people is that they will suffer. You will get less money. But it is important to know and understand its benefits.
New Wage code: We have been hearing from last one and half year that salary will change, holidays will increase, shift time will be more and many more… But, the question is in mind that when will these new codes be implemented? Let it be implemented, but how much will your salary structure change? The component of Basic Salary will be 50% of the total salary i.e. CTC. The huge amount of allowances will be reduced. From this everyone guessed that the take home salary i.e. the salary in hand would be reduced. But, is there only visible damage in this? So we will tell you where and how you should also see the benefit in it.
Basic salary will increase in New Wage Code
The central government prepared 4 new labor codes by adding 29 labor laws. These were given the name of New Wage Code. There is a provision in the Wage Code 2019 that in the salary that companies will give to their employees, the share of basic salary will be 50 percent of the total salary (CTC). Till now companies keep the basic salary part low and the reimbursement-allowance part more. These include allowances like Leave Travel Allowance (LTA), Overtime and Conveyance allowance. With the implementation of the New Wage Code, there will be a change in the salary structure. However, when this will come into effect, its date has not been decided yet.
New Wage Code has become law, just waiting for the date
The New Wage Code is not implemented yet, it does not mean that it will never be implemented. For information, let us tell you, it has got the approval of the President. That means it has become law. So it will be applicable. When the date has not been decided yet. But, definitely understand what the changes will be for you.
Your salary will be the same, there will be no change in it. Some figures will be increased or decreased in just salary structure or you say salary slip.
If the basic salary component is less than 50%, then it will increase to 50% or more. If your basic salary is 50% of the total salary, then believe me there will be no change.
What are the benefits of the New Wage Code?
Income Tax
Above we mentioned that your Provident Fund share will be higher after the implementation of the New Wage Code. Meaning more money will be deposited in it. If there is more investment, then the tax savings will also be more. However, one thing to keep in mind is that if you deposit more than Rs 2.50 lakh in a financial year in the Provident Fund, the interest earned on the amount above that will be taxable.
Bank loan
Very few people know this thing that while applying for the loan, the bank does not see your in hand salary but basic salary. In such a situation, by increasing the basic salary, your chances of getting a loan will also increase. The higher the basic salary, the higher the chances of getting a loan on easy installments.
Job Change
People often ask your CTC after leaving the job. But, whenever the HR of the new company talks about your salary, he also prepares the complete structure on the basis of basic salary. If the focus of the new company goes to your basic salary, then you will get a new hike on the increased basic salary. That means you have an advantage in this too.
Employees’ Provident Fund
: Provident Fund (EPF) is deducted from the salary, its calculation is done on the basic salary. 12% of the basic salary goes to EPF. The same part is also deposited on behalf of the company. With the increase in basic in the new salary structure, the contribution of you and the company will also increase. For example- your salary is Rs 40,000, whose basic is Rs 15,000. In the new structure, the basic will increase to Rs 20,000. Meaning that earlier Rs 1800 was deposited in PF from one share, whereas now at least Rs 2,400 will be deposited. 600+600 rupees will increase from both the sides. Interest will also be available on the annual deposited capital, which means that the pension corpus will be very high on your retirement.
Gratuity
Gratuity is a long term benefit plan. An employee who works continuously for 5 years in a company gets it. Its calculation is also done on Basic Salary. With the implementation of the new Wage Code, the employer will have to spend more money for this as well. The employee will get more amount as gratuity.
What will be its effect?
With the implementation of the New Wage Code, changes in the salary structure will also have an impact on the companies, they will have to fill more EPF. Gratuity will also have to be paid more. At the same time, the government will get more money in the form of tax. This will benefit him. Your CTC may increase if the company changes the salary structure. To keep the take home salary the same, the company will not change it.
