7th Pay Commission: There is big news for the government employees of the country. After the dearness allowance (7th Pay Commission) to the central employees, now the Modi government is preparing to implement the new labor law (New Wage Code 2021) soon, the Labor Ministry has completed the preparations. But the draft is yet to be finalized at the level of some states, it is expected that it can be implemented by the end of this year. If this happens, then there will be a big impact on salary, PF and graduation.
According to media reports, the Modi government was going to implement the Labor Code Rules 2021 from October 1, 2021 after a delay in July, but the matter got stuck due to the delay in the draft of the states, but now it is discussed that the Ministry of Labor has completed the preparations and it can be implemented by the end of December. This will reduce the salary of the employees as they will get less salary from the current take home and more deduction will be in their PF. However, this benefit will be known to the employee at the time when he retires. In the amount of PF they will get, they will get a bigger amount than before.
The special feature of the new wage code is that the cash-in-hand salary of the private employer will decrease, that is, the monthly salary will decrease, because more money is deducted for PF. But after retirement you will get big fund. The same gratuity will also increase. The basic salary of the employees cannot be less than 50 percent of the CTC of the employees. Due to increase in basic salary, PF of employees will be deducted more. This will definitely reduce the salary in the hands of the employees, but they will get more money on retirement.
Understand complete maths like this
- Under the current wage code, whose monthly salary is Rs 50,000 and the basic pay will be Rs 15,000, then the amount of PF on retirement will be Rs 7,14,53,72.
- In the New Wage Code, the Basic Salary will be 25 thousand rupees per month, then the amount of PF on retirement will be Rs 1,19,08,953. Here the annual increment of 5 percent has been taken, due to which the PF fund will increase further.
- Basic salary is the base income of an employee, it is fixed based on the level of all the employees. It varies according to the rank of the employee and the industry in which he is working.
- The salary which is made by adding basic pay and allowances without deducting tax is called gross salary, it includes bonus, overtime pay, holiday pay and other items of allowances.
Gross Salary = Basic Salary + HRA + Other Allowances
- Net salary is also called take home salary, the salary which is made after deduction of tax is called net income.
Net Salary = Basic Salary + HRA + Allowances – Income Tax – EPF – Professional Tax
Benefits of News Wage Code
- With the implementation of the new wage code, the PF of the employees will be deducted more, more amount will be deposited.
- After retirement, you will get a good pension and a big fund will be ready.
- Contribution in gratuity will also increase. One month gratuity is also available.
- Employees in the unorganized sector will get the benefit as there is no fixed format for the salary of such people in many companies till now.
- There will be equality in the salary of the employees working in every industry and sector.
- People will invest more and the investment cycle will get a boost.
- Tax savings will also be more, although its limit will be Rs 2.5 lakh at present.