Business Desk, Amar Ujala, New Delhi
Updated Thu, 10 Dec 2020 12:37 PM IST
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Changes can be made in the component or structure of the salary of employees, which is possible to reduce their take home salary. In fact, the government has issued notification of the draft rules under the new remuneration rules, due to which companies may have to change the structure of their salary package.
What is the rule?
These new rules come under the Code on Wages, 2019, which is likely to come into effect from April next year. Under this allowance, along with allowance component i.e. salary, cannot be more than 50% of the total salary (CTC). That is, basic salary will be 50% of the salary structure.
For this, companies will have to increase the basic pay component of salary, due to which the amount of gratuity payment and provident fund to be filled by the employee will increase. Understand in simple language, then increasing the amount of money for retirement means that your take-home salary will decrease, but your retirement fund will increase.
Private sector employees will be affected
At present, most private companies prefer to keep the non-allowance portion less and the allowance portion more in the larger share of the total CTC. But the new rule will change this. These rules will change the salary of private sector employees as they usually get more allowance.