How new labour, tax rules are set to affect your salary

Changes will vary by salary structure and industry, but firms aim to keep in-hand pay similar

- Shefali Anand

Come 1 April, many Indian companies are expected to rejig employee compensation structures to comply with the notified labour laws and the proposed changes to personal income tax rules.

Which components of salary will change will depend on your income level and more broadly on your organization’s demographics and industry, but largely companies are aiming to keep take-home pay close to the old one. “Cash in hand is always the king in India,” said Rajul Mathur, consulting leader, work and rewards, WTW India, formerly Willis Towers Watson, a global advisory firm.

Some companies are seeking to increase or introduce certain allowances that could help lower your taxable income, which could help boost your post-tax income.

While some companies are expected to roll out the changes as early as 1 April, others are awaiting government guidance on the new labour laws, so the changes might not come until later in the year. Either way, it's a good idea for employees to stay informed.

“It's going to be a massive change,” said Sahil Sharma, chief human resources officer at Rate Gain Travel Technologies Ltd, a Noida-headquartered software company. While the company is awaiting government rules to finalize its plans, once they do so, Sharma said they plan to hold a town hall for their 800-plus employees to explain what is changing and set up kiosks for one-on-one sessions to address employee concerns and questions.

New rules

There are two main driving forces behind the upcoming changes.

One is a new definition of “wages” introduced by the new Code on Wages, which came into effect in November.