Is your Basic Salary, 50% of Gross?
Hi Hyderabad/Telangana folks, just wanted to understand if your organisation has implemented the “Code on Wages, 2019 Act” in the salary structure. As per the law passed in 2020, the Basic Salary component must be at least 50% of the Gross Pay. So is it already implemented in your organisation?
Thanks for the Votes guys. It looks many companies of Telangana still haven’t implemented it, which is good. I am just trying to understand if Telangana Govt mandated all the organisations to implement the law by modifying the salary structure. In my organisation it was done in 2021 end only, and it is such a pain, such a huge loss.
why loss? if you need home loan deductions, i understand.
I prefer to max out basic, to max out on employer PF Contribution and file in the new tax regime. Saves the hassle of investment+ expense proofs.
I have stopped all investments after
@majboormajdoor Nope. In usual cases, loss is certain due to this new slab change. I have faced it and calculated very closely. The loss can be countered only if you show full HRA, i.e. you show full HRA as rent paid. For ex, if you get 30k as HRA, show that 30k is the rent paid as well. In that case, it is good. But if you go honestly, loss will be there in HRA section. More tax deductible will happen, since HRA exemption is based on basic. Also, gratuity deduction will be more, an amount which may not come ever, and even if it comes, it will be still a loss, since gratuity amount to receive doesn’t depend on how much was deducted. So while the gratuity deduction increased, its final payment to you, is irrespective of that deduction…
How much is the difference in your tax outgo? And what % is that of your monthly in-hand salary?
If it is less than 5%, is it worth the effort to
- pay higher rent, invest in ppf, nps etc
or - make rent receipts, LTA proofs to save that tax?
For most higher earners below 35/40y, investing in Corporate NPS plans would save less as a % of their in-hand salary and make less sense to lock that amount until their 60s only to lose 40% of that to an annuity pension. Not all, but most.
i dont know why it got posted as a separate comment, but its continuation of our thread.
Yeah NPS seems useless to me. But as said, even if one chooses new regime this new law still leads to loss due to increased gratuity deduction. So any which way you look at it, this is against honest salaried folks.
