The budget for the year 2022 has been presented recently. Under the new budget, a new wage code can be implemented for the employees soon. At the same time, its implementation is going to have a huge impact on the people across the country. There is bound to be a change in the salary of the employees to the pension. Many provisions have been made in the budget, which is very important for you to know. It is being claimed in the reports that the new wage code can be implemented from the new financial year. Although officially nothing has been said on this from the government till now. In fact, according to the Wage Code Act, 2019, the basic salary of an employee cannot be less than 50% of the cost of the company. Many companies reduce the basic salary and give more allowances from above so that the burden on the company is reduced. At the same time, with the implementation of the Wage Code Act, 2019, the salary structure of the employees will change completely.
Under this change, the 'Take Home Salary' of the employees will be reduced, because due to the increase in the 'Basic Pay', the PF of the employees will be deducted more. This means their future will be more secure. At the same time, the contribution to gratuity will also increase with PF, due to which the take-home salary will decrease but the employee will get more amount on retirement.
The CTC of the employees depends on many factors. Like Basic Salary, House Rent (HRA), PF, Gratuity, LTC and Entertainment Allowance, etc. With the implementation of the new Wage Code rule, companies will have to ensure that the factors other than basic salary (CTC) to be included in it should not exceed 50%. This can be a big problem for companies.
The impact of the cut in take-home pay will be minimal for low- and middle-income earners. Whereas for high-income earners this can be a big blow. The PF contribution of big earners will also be higher, due to which their take-home salary will also be reduced significantly.
Along with this, the gratuity of such employees will also be deducted more. The basic salary is taxable. This is the reason that if the salary is high, the tax will also be deducted more.
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