Despite Appraisals, Your Take-Home Salaries Could Shrink April 1 Onwards. Here's Why

According to the new wage rule, under the Code of Wages passed by the Parliament in 2020, the take-home salary of most private firm employees is likely to come down as the contribution to provident fund (PF) and gratuity are to be increased.?

This change in the wage rule is set to come into effect April 1 onwards.

While businesses and individuals are still reeling under the impact of COVID-19 pandemic, the decline in take-home salary could add to the woes.

ET

Here's all you need to know:

• The country's new definition of wages includes all remuneration, whether by way of salaries, allowance or otherwise.

• Private companies will have to restructure their wages.

• According to the new rules, the allowance component can’t exceed 50 per cent of the total salary. The companies will now have to increase the basic salary component, making the contributions to provident fund and gratuity go up.
  

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• This will result in lower in-hand salary of most employees
  

• It also means that if you get a salary hike in 2021, it is unlikely that there will be any visible increase in the amount of money that actually goes directly into your pockets.
  

• However, the long-term benefits are set to go up.