Bhubaneswar: The Central government is likely to implement the New-Wage Code Bill 2021 from April 1, 2021.
This may change the existing monthly Provident Fund (PF) and gratuity contributions by employees. As per the provisions under the new system, the share of basic salary in CTC could be 50 per cent or more.
It means if the new wage code gets implemented from April 1, 2021, then the employees will not get more than 50 per cent of their net monthly salary in form of allowance.
Apart from this, it will affect the pay structure includes the take-home pay, PF and Gratuity of the employees.
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Earlier, Union Finance Minister Nirmala Sitharaman during her Budget 2021 announcement said that interest on employee contributions of over Rs 2.5 lakh per annum to the provident fund would be taxed.
This is likely to impact the high-income earners and High Net-worth Individuals (HNIs). Under the existing tax provisions, interest received/accrued from employee’s provident fund (EPF) is exempt from tax. However, the new rules will potentially impact employees in high income bracket or employees making large voluntary employee provident fund contributions, as per a report by timesnownews.com.
Apart from Wage Code, Industrial Relations, Occupational Safety, Health and Working Conditions and Social Security Codes are also likely be implemented.