🚨 Big News for All IT Folks: India's New Labour Codes Just Dropped! 🚨
Wondering how your salary will change at TCS and similar firms? Here's what the new law actually does (Code on Wages, 2019, effective Nov 21, 2025):
1️⃣ Your basic pay + fixed allowances must total 50% of CTC. No more keeping basic low! • Example: CTC ₹5L – old basic ₹16k, new basic+allowances ₹25k • PF is now 12% of ₹25k instead of 12% of ₹16k
2️⃣ Gratuity bonanza 💥 • You become eligible after ONE year (was 5 years before)! Reference: Section 53, Code on Social Security, 2020. • Gratuity calculation: (Basic + DA + Allowances) × 15/26 × years served • Example: 5 years at ₹25k "wages" = ₹72k gratuity vs old ₹46k
3️⃣ Hidden tax benefit 💰 • Higher basic = bigger NPS tax deduction! • NEW RULE: Employer NPS contribution up to 14% of basic is TAX-FREE under new tax regime (Section 80CCD(2), effective FY 2025-26) • Old basic ₹16k → Max ₹2,240/month tax-free (was 10% earlier) • New basic ₹25k → Max ₹3,500/month tax-free (14% now!) • That's ₹15,120 extra annual tax savings compared to old structure!
THE CONS (let's be real): ❌ Monthly take-home drops by ₹1,000-1,500 due to higher PF deduction ❌ Less cash in hand each month for immediate expenses ❌ Companies will take time to restructure (Q1-Q2 2026)
THE PROS (why it's actually amazing): ✅ PF grows 50-60% faster = better retirement corpus ✅ Gratuity eligibility drops to 1 year (huge for job hoppers!) ✅ Higher gratuity payouts when you leave ✅ Better NPS tax benefits (14% vs old 10%) ✅ Forced savings = financial discipline ✅ Employer also contributes more to YOUR PF (they match your 12%)
⏳ When's this happening? Law is live NOW (Nov 21, 2025). Companies must restructure by Q1-Q2 2026 as detailed rules get notified and HRs rework payslips.
Bottom line: Yes, your monthly cash reduces. But your retirement fund and exit benefits skyrocket. For long-term wealth building, this is MASSIVE. Plus it closes loopholes across all sectors—yes, even IT and TCS can't dodge this!
People leaving in 2026-27? Get ready for that fat gratuity cheque 🚀
#salary #newlaw #gratuity #pf #NPS #TCS #ctc #taxsavings
Oye labour laws don't affect software developers.
I respectfully disagree. The new labour codes absolutely apply to software developers and IT employees.
Here's why:
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The Code on Wages, 2019 (Section 2(m)) defines "establishment" as any place where business or occupation is carried on - IT companies fall under this. There's no exemption for software developers.
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The government's official notification specifically mentions IT and IT-enabled services. Why would they mandate salary payment dates (by 7th of month) for IT workers if the law didn't apply to them?
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The codes explicitly cover IT-specific arrangements like work-from-home, fixed-term contracts, and gig workers - all common in tech.
You might be thinking of the old 2009 exemption under the Industrial Employment Standing Orders Act, which was temporary (2-year), limited to small startups, and has nothing to do with the 2025 labour codes.
TCS, Infosys, Wipro, and all IT companies must comply with:
- 50% basic pay requirement (Code on Wages)
- PF, gratuity
- Appointment letters, grievance mechanisms (Industrial Relations Code)
Sources: Ministry of Labour PIB release (Nov 19, 2025), Code on Wages 2019 full text, Moneycontrol Nov 21 2025 article on IT sector compliance.
The law is clear - software developers are covered.
All this is apply on temporary or contractual employees 🤣🤣
