How New Labour Codes Boost Your Retirement
A simple guide to how India’s new Labour Codes change salary structures, reduce take-home pay, and boost PF and gratuity, creating a larger retirement corpus.
For years, companies kept Basic Pay low and allowances high. This meant smaller retirement savings. The new Labour Codes change that, ensuring more money goes into your future.
The 50% Rule
Your Basic Pay + Dearness Allowance must now be at least 50% of your CTC.
Example: On a ₹25 LPA CTC, Basic Pay must be ₹12.5 LPA (instead of ₹7.5 LPA earlier).
What Changes
- Old way: Lower Basic Pay → smaller PF and gratuity.
- New way: Higher Basic Pay → bigger PF and gratuity.
Short-Term Impact
Take-home salary drops because more goes into PF and gratuity.
Same CTC, just split differently: Lower cash in hand + Higher retirement savings.
Long-Term Benefit
- PF corpus grows faster with higher monthly contributions.
- Gratuity payout increases since it’s linked to Basic Pay.
- Over a career, this can add up to crores in retirement wealth.
What You Should Do
- Check your salary slip: Ensure Basic Pay is 50%+ of CTC.
- Plan your budget: Adjust for a smaller take-home.
- Think long-term: View this as guaranteed wealth creation.
Quick takeaway
In short: Less cash today, but a much bigger retirement cushion tomorrow.
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Krishna Gopal Varshney
An editor at apnokacaKrishna Gopal Varshney, Founder & CEO of Myitronline Global Services Private Limited at Delhi. A dedicated and tireless Expert Service Provider for the clients seeking tax filing assistance and all other essential requirements associated with Business/Professional establishment. Connect to us and let us give the Best Support to make you a Success. Visit our website for latest Business News and IT Updates.
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Krishna Gopal Varshney
An editor at Myitronline
Krishna Gopal Varshney, Founder & CEO of Myitronline Global Services Private Limited at Delhi. A dedicated and tireless Expert Service Provider for the clients seeking tax filing assistance and all other essential requirements associated with Business/Professional establishment. Connect to us and let us give the Best Support to make you a Success. Visit our website for latest Business News and IT Updates.
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