New Wage Code Bill 2021

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India's new labor codes, which includes a revised definition of the wages, are to kick starting from 1 April. The new definition is expected to shrink your cash-in-hand salary at the end of the month but boast the long-term benefits like gratuity and leave encashment. As the Government plans to implement New wage code Bill 2021, salary may see huge overhauling.

What's there in New Wage Code Bill, 2021

Revised Salary Structure: -

According to the New Wage code, if implemented, the share of basic salary in your CTC( Cost-to-company) should be 50 percent or more. If the basic salary is less than 50 percent in your Salary details, then it is going to change soon. Your CTC may also increases with your basic salary when the rules will be implemented. Allowance to employees, like leave travel, house rent, overtime and conveyance Lowrance, will have to be crapped to the remaining 50 percent of CTC.

 Increase in PF Contribution: -

 Presently 12 percent of your basic Salary now goes to PF. When basic Salary becomes 50 percent of the CTC, the contribution to the PF will also increase. For example, a person have a monthly salary of 40000, then the basic salary will be 20000 and ₹2400 will go in the PF account.

 New Gratuity Rule: -

 New rules of gratuity have been made in the new labor code. Rightnow , employees are entitled to gratuity after 5 years of continuous work in the  same Company, but in the new law, employees will be entitled to gratuity even if they have been employed for just one year.

 Ease in LTC rules:-

The Centre had declared relaxation in the Leave Travel Concession (LTC) scheme due to the COVID-19 outbreak in 2020. The relaxation allowed the central government employees to claim income tax benefits on expenses made between October 12,2020 to March 31 2021, on purchase of item that attract GST rate of 12 percent or more instead of travel expenses.

   DA hike:-

Speculation are rife that the Centre would announce a hike of 4 percent in DA. Centre would also may make an announcement regarding DA hike due January 2021. If the Centre decides the hike then the existing 17 percent DA of the Central government employee will jump to 85 percent (17+4+4).

EPFO Contribution:-

From April 1 2021, interest on employee contributions to provident fund above  2.5 Lakh per annum will be tax able. This announcement was made by Union Finance Minister Nirmala Sitharaman in her budget speech.

Income Tax rules for senior citizens:- 

Person whose age is above 75 years and who has pension income and interest from fixed deposit comes in the same bank and who has only interest income, they need not to file income tax returns. Bank will deduct the income tax which he/she has to pay and deposit to the Government.




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