Now a major shift in Indian payroll has finally arrived. Specifically, the new labour laws became effective on April 1, 2026. Indeed, these reforms change how your monthly pay is calculated. Therefore, while your total CTC stays the same, your in-hand salary might look different. In fact, the government wants to help you save more for your retirement. Simple as that.

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Salary Change Snapshot: ₹6 Lakh CTC

Now you can see exactly how the monthly cash flow shifts. Actually, the law requires your “Basic Pay” to be at least 50% of your total pay. In fact, here is the data for a ₹6 Lakh annual package.

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The New Definition of “Wages”

Now the biggest change is the uniform definition of what counts as a wage. Actually, it simplifies the way companies must split your salary.

The 50% Rule

First, your basic pay, DA, and retention allowance must now make up half of your total pay. Next, if your allowances (like HRA or Bonus) exceed 50%, the extra is added back to your basic pay. Thus, many employees will see their “Basic Pay” component go up significantly. Furthermore, this change is not just a paper move. Specifically, it affects all other benefits that are linked to your basic pay. Therefore, your total social security pool grows larger every month. Period.

Higher EPF and Gratuity Benefits

Now you might wonder why your take-home pay is dropping. Actually, that “lost” money is moving into your long-term savings.

Building Your Future

First, both your EPF and Gratuity are calculated as a percentage of your Basic Pay. Next, because your Basic Pay is now higher, your monthly EPF contribution also increases. Thus, for a ₹6 Lakh CTC, your EPF deduction goes up by about ₹600. Furthermore, your gratuity for one year of service will now be roughly ₹14,423. Specifically, after five years, this total grows to over ₹72,115. Therefore, you are trading a small amount of current cash for a much larger retirement fund. Period.

Expert Advice: Reallocation, Not a Cut

Now tax experts suggest that employees should not view this as a salary cut. Actually, it is a smarter way to manage your total earnings.

Tax Planning Tips

First, your employer’s total cost (CTC) usually stays the same. Next, you can manage the impact through better tax planning. Thus, using Sections 80C and 80D can help you lower your tax bill. Additionally, the new tax regime now offers a higher standard deduction for 2026. Moreover, optimizing your HRA can further protect your income. Consequently, with a little planning, your total financial health will actually improve over time.

Frequently Asked Questions

Q: When did these laws start?

Now, they became effective starting April 1, 2026. Thus, your April salary slip will likely show these changes.

Q: Can I opt out of the 50% Basic Pay rule?

Actually, no. It is a mandatory legal requirement for all companies in India. Therefore, all salary structures must follow this law.

Q: Why did my take-home pay decrease?

Actually, it is because your EPF contribution went up. Thus, more money is going into your provident fund rather than your bank account.

Q: Is this change better for me in the long run?

Since it builds a larger retirement and gratuity pool, most experts say yes. Therefore, it provides better financial security for your old age.

The Bottom Line

Now the New Labour Laws of 2026 focus on your future comfort. While seeing a smaller paycheck is never fun, the long-term gains are significant.

Overall, the shift ensures that every salaried worker builds a solid nest egg. Therefore, make sure to check your new salary slip carefully this month. Thus, you can adjust your personal budget to match your new in-hand pay. Meanwhile, keep checking our blog for more updates on the 8th Pay Commission and tax tips! Lastly, we wish you a very secure financial year ahead!

Save more. Rest easy. Period.

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Gratuity will be available in less than 5 years

People doing private jobs often have questions and confusion about gratuity. They keep thinking that gratuity is available only after 5 years? Actually, usually gratuity is paid only after 5 years of continuous service, but in certain circumstances this timing is not necessary. For example, if an employee dies or becomes permanently disabled, then the amount of gratuity can be given to him or his dependents even before 5 years. So this is why it is important that every employee has the correct information about the rules related to gratuity.

What is gratuity?

Gratuity is considered a kind of thanks or reward, which an employer gives to his employee for working continuously in the company for a long period. It is a lump sum payment. It also comes under the ‘Payment of Gratuity Act, 1972’, which has been made with the aim of providing financial security to all employees at the time of retirement. It is not a part of any employee’s salary, but is an extra benefit.

What is the important eligibility for gratuity?

Actually, according to its Act, the first and most important condition for getting gratuity is that the employee has worked continuously for at least 5 years in the same company. This rule applies to getting gratuity after retirement, resignation or leaving the job. So if any employee leaves the job before 5 years, then he generally cannot be entitled to gratuity.

Can gratuity be received for working for less than 5 years?

Although most people think that it is necessary to work for at least 5 years to get gratuity, but this is not always true. Because at certain times this rule does not apply. So if an employee dies during service, then gratuity can be paid to his nominee regardless of the service period. Similarly, if someone becomes permanently disabled due to an accident or serious illness while working, then he can also have full right to get gratuity.

What does 5 years continuous service mean?

The ‘Payment of Gratuity Act, 1972’ has clarified about ‘5 years of continuous service’. If an employee has worked for 240 days or more in the last year, then he will be considered as ‘full year’ for that year. That is, for example, if an employee has worked for 4 years and 240 days, then he will be considered as having completed 5 years of service for calculation of gratuity.

How is gratuity calculated?

If you want to know how much gratuity you will get on leaving the job, then its simple formula is: (Last salary × 15 / 26) × years of service. Last salary includes your basic salary and dearness allowance (DA). According to the Gratuity Act, calculation is done on the basis of 15 days’ salary, assuming 26 working days in a month. For example, if your last salary is ₹35,000 and you have worked for 7 years, then you can get ₹1,41,346. In this, a maximum of ₹20 lakh gratuity can be available tax free.

What is the tax rule on gratuity?

The rule related to tax on gratuity depends on the type of employee and it is important for every employed person to know it. So if you are a government employee, then the entire gratuity amount you get is tax free, and for employees working in the private sector, there is no tax on gratuity amount up to ₹ 20 lakh. (Note- The news is based on general information, consult an expert for more information on gratuity)

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What is Gratuity: Gratuity is the amount that is given to an employee when he leaves the company. Provided that he has completed five years of service or more. In India, this payment comes under the Gratuity Act 1972.

How Gratuity is Calculated

Gratuity is calculated on the basis of the last basic salary received by the employee. The formula for this is:

Last monthly salary × 15/26 × Number of years of service

Based on the years of service, an amount equal to 15 days’ salary is received.

For example:

Suppose an employee’s annual basic salary is Rs. 6,00,000.

Monthly basic salary = ₹6,00,000 ÷ 12 = ₹50,000

Years of service = 10

Now, according to the formula:

Gratuity = (₹50,000 × 15/26) × 10

= (₹28,846) × 10

= ₹2,88,460

Thus, the employee will get a gratuity of Rs 2,88,460 for 10 years of service.

Let’s know how gratuity is written in the offer letter: Generally, gratuity is written in the offer letter as 4.81% of the annual basic salary.

For example:

Gratuity = 4.81% × ₹6,00,000 = ₹28,860 per year

What happens when salary increases: Since gratuity is based on the last basic salary, whenever there is a salary increase, the calculation of gratuity also increases accordingly. This is usually reflected at the time of annual salary review. Gratuity is a significant part of the salary received on leaving the job. Although it is a part of CTC, it is not directly received in the monthly salary but is received after the termination of the job. Therefore, there are certain conditions, after which gratuity is received.

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If he leaves or changes his job before the stipulated time period, he does not get the benefit. In such a situation, the question often arises whether the gratuity rules are different for government and private jobs ? Let us tell you that it is not so. Even if you are a government employee or doing a private job, the rules of gratuity are the same for you.

This month, Allahabad Court gave an order regarding gratuity that if the employee chooses retirement after 60 years or takes retirement at 62 years, he will get the benefit of gratuity in both the forms.

Also Read: Filing tax returns? Check your AIS before filing income tax return

Actually, many companies did not provide the benefit of gratuity to the employee because the employee had selected the option of retirement at 62 years.

What is gratuity?

Gratuity is given by the company to its employees. When an employee works in the same organization for 5 years, he gets gratuity as a mark of gratitude. The benefit of gratuity is available to all government employees as well as private employees.

The Payment and Gratuity Act is applicable on all the companies, factories, mines, oil fields, ports and railways of the country. At the same time, even if more than 10 people work in a company or shop, they still get the benefit of gratuity.

When is gratuity received?

Employees become eligible to receive gratuity after working in any organization for 5 years. But in some cases this time limit is less. According to Section-2A of the Gratuity Act, if an employee works in an underground mine, then he can avail the benefit of gratuity after completion of 4 consecutive years and 190 days.

Whereas in other organizations, gratuity is given only after 4 years 240 days (i.e. 4 years 8 months). The benefit of gratuity is available after leaving the job or after retirement. You cannot take advantage of this while working. You get this benefit when you resign from the company.

Let us tell you that notice period is also counted in gratuity. Actually, notice period also comes under ‘continuous service‘.

How is gratuity calculated?

You can calculate gratuity very easily. You can easily calculate gratuity by adding basic salary and dearness allowance x (15/26) x (number of years worked).

Also Read: ITR filing AY 2024-25: I-T dept makes changes in ITR-1 for AY2024-25, Details Here

For example, your basic salary and dearness allowance together is Rs 35000 and you have worked in the company for 7 years, then the total gratuity you will get is 35000 x (15/26) x 7 = Rs 1,41,346.

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Gratuity is paid to all government and private sector employees for working with the same company or employer for a certain period. Everyone knows this, but this time very few employees would know that under certain conditions your employer may refuse to pay gratuity.

Under the Gratuity Act 1972, every company that employs more than 10 employees is required to pay gratuity. But, if an employee is being fired from the company due to his misbehavior or giving wrong information, then the employer can refuse to pay him gratuity. The Gratuity Act says that if an employee is fired from the company due to any willful default or causing damage to the property of the employer or his services are terminated due to any negligence, then the employer will have the right to withhold gratuity equal to his loss.

Employer’s rights are also limited –

It is not that the employer can stop the gratuity of an employee just by giving one reason. A proper law has been made in this regard also in the Gratuity Act. It is clearly stated in this that if the employer withholds the gratuity of an employee, he will first have to give a valid reason and can withhold the amount of gratuity equal to the loss claimed therein.

What does the law of gratuity say –

According to section 4(6)(b)(ii) of the Gratuity Act, any behavior done by an employee which causes loss to the company, even if it is on moral grounds, yes. In such cases, the employer will first issue a notice to the employee and seek his reply and only then can he start the action to stop the gratuity.

What is the order of Delhi High Court-

Delhi High Court has also passed an order in this regard. Justice Pratibha M Singh had said in her decision that if an employee’s moral or material actions cause loss to the company, then the employer can withhold gratuity from him to compensate for his loss. The court has made it clear in the decision that in such a case, the same amount of gratuity can be withheld as the loss suffered by the employer.

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👉 Ministry of Finance @FinMinIndia approves welfare measures for LIC agents and employees @LICIndiaForever

👉 Welfare measures include:

✅ Increase in gratuity limit
✅ Eligibility for renewal commission
✅ Term insurance cover, and
✅ Uniform rate of family pension for LIC… pic.twitter.com/tEzLiQPMsq

— Ministry of Finance (@FinMinIndia) September 18, 2023

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For labor reform in the country, the central government may soon implement 4 new labor codes. Minister of State for Labor Rameshwar Teli has given written information regarding this in the Lok Sabha. After the implementation of the new labor codes, there will be a change in the salary, leave, provident fund and gratuity of the employees.

There will be no compulsion of 5 years continuous job in any institution for government gratuity. However, there has not been a formal announcement on this from the government yet. But, it will come into effect as soon as the new labor law comes into force.

How much gratuity is received?

As of now, according to the rule regarding gratuity, gratuity is made on completion of 5 years in any institution. On completion of 5 years, the calculation of gratuity is done on the basis of your salary in the month on which you leave the company. For example, A worked in a company for 10 years. In the last month, 50 thousand rupees come in A’s account. In that his basic salary is 20 thousand rupees. 6 thousand rupees is his dearness allowance.

Gratuity will be calculated on the basis of 26 thousand (Basic and Dearness Allowance). Working days are considered 26 in gratuity. Now divide 26 thousand by 26. The result came out to be 1000 rupees. Now it has to be multiplied by 15 days because it is added according to 15 days in a year. The result will be 15000. If he worked for 5 years, he would get a total of Rs 75,000 as gratuity.

Gratuity is mentioned in the social security bill

In Chapter 5 of the Social Security Bill, 2020, information about the rule of gratuity has been given. Apart from salary, pension and provident fund, gratuity is also given to the employees working in the same company for a long time. Gratuity is the reward an employee receives from the company. If the employee fulfills certain conditions of the job, he is paid guaranteed gratuity under the prescribed formula. A small part of gratuity is deducted from the salary of the employee, but the major part is paid by the company.

Will you get gratuity even after 1 year of service?

According to the information given in the draft copy filed in the Lok Sabha, if any employee works for one year at any place, he will be entitled to gratuity. The government has made this arrangement for fixed term employees ie those working on contract. Even if a person works for a fixed period of one year on a contract with a company, he will get gratuity. The employee working on contract is now being given the right to social security like a regular employee. Apart from contract employees, those working in seasonal establishments will also get the benefit of this.

Who will get benefit from Gratuity Act 2020?

Only fixed term employees will get the benefit of Gratuity Act 2020. For others also the old rule will continue. At present, gratuity is fixed on the basis of 15 days salary every year on completion of five years of service. Gratuity is given to the employees by the company. Its maximum limit is 20 lakh rupees.

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That’s why it is also called token of appreciation. If you are a government employee, then you do not have to pay any tax on the amount received in gratuity. However, if you are a private employee then there is a tax rule on your gratuity.

Earlier, if a person received gratuity more than Rs 10 lakh, then he had to pay tax on the excess amount. However, now it has been increased to Rs 20 lakh. This means that if you get Rs 20 lakh as gratuity, no tax will be charged, but if you get Rs 21 lakh, you will have to pay tax on Rs 1 lakh.

How will the tax be calculated?

If someone has received a gratuity of Rs 21 lakh, then the additional Rs 1 lakh will be added to the annual income of that person. After this, according to the tax slab in which his new salary will come, tax will be collected from him.

How is gratuity calculated?

There is a fixed formula for calculating gratuity. (Last Salary) x (15/26) x (number of years worked in the company) = total gratuity amount. Suppose you worked in a company for 20 years and your last salary was Rs 50,000 per month. This gives you 2 numbers in the formula.

Now 15 and 26 are left, what is this? When gratuity is calculated, only 26 days are counted in a month because 4 days leave is removed. In this formula, 15 means that only 15 days of gratuity is available in a year. The calculation will be something like this – (50,000) x (15/26) x (20) = Rs 576,923. That is, after 20 years of service, you are entitled to a gratuity of about Rs 6 lakh.

Where is gratuity not available?

If the number of employees in a company is less than 10, then there is no provision for gratuity. However, if a company previously had more than 10 employees and recently this number has come down due to downsizing, even then the existing employees will be entitled to gratuity.

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It is important for us to know what kind of standards have been set by the government to get gratuity. How is the amount of gratuity decided and after working for how many years you get gratuity. Actually, gratuity is the reward received by the company from an employee. If the employee fulfills certain conditions of the job, then the payment of gratuity will be guaranteed to him under a prescribed formula.

When do you get gratuity

A small part of gratuity is deducted from the salary of the employee, but the major part is given by the company. According to the current rule, if a person works in a company for at least 5 years, then he becomes entitled to gratuity. That is, if you leave the company after 5 years, you will get gratuity.

According to the Payment of Gratuity Act, 1972, its benefit is available to every employee of a company where at least 10 employees work daily in a year. If the employee changes jobs, retires or leaves the job for any reason but he fulfills the rules of gratuity, then he gets the benefit of gratuity. On the other hand, if a company or organization does not come under the purview of the Gratuity Act, but if it wishes, it can give the benefit of gratuity to its employees.

According to the formula of gratuity, if an employee works for more than six months, then his calculation will be done as one year. For example, if an employee works for 7 years and 8 months, then it will be considered as 8 years and on this basis the amount of gratuity will be made. On the other hand, if he works for 7 years and 3 months, then it will be considered as 7 years only.

How is the amount of Gratuity determined (Gratuity Formula 2023)

There is a fixed formula to calculate gratuity. Total gratuity amount = (last salary) x (15/26) x (number of years worked in the company). Suppose an employee worked in the same company for 20 years. The final salary of that employee is Rs 75000 (including basic salary and dearness allowance), then he will get around Rs 8.65 lakh as gratuity ((75000) x (15/26) x (20) = Rs 865385). In the formula for gratuity calculation, only 26 days are counted in every month, because it is believed that there are 4 days off. Whereas gratuity is calculated on the basis of 15 days in a year.

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Whose performance is not good. The government has issued a notification on October 26, considering Rule 8 of the CCS (Pension) Rules 2021 as the basis. After which the breath of lakhs of employees has got stuck. Because there is a part of the employees in government jobs who take salary for free.

But now all such employees will have to show their work. Because now every month the work report of the employees will be prepared. In fact, while making changes in the rule of Pension Rules 2021, the government has issued orders to stop Gratuity and Pension of those people. Those who are involved in some crime somewhere. Or not doing their job properly.

It is being told that the report card of the central employees will now be prepared every month. In which everything from crime will be included. It is being told that at present the rule has been implemented only on central employees. But going forward, states can also implement it according to their own. However, so far only the Central Government has implemented this rule.

Action will be taken in this situation

Let us tell you that if an employee is re-appointed after retirement, then this rule will also be applied to him. Not only this, if a case is filed against an employee. Also, if the employee is found guilty, he will also be deprived of gratuity and pension. Apart from this, the employees who are negligent in work will also come under its purview.

In this, it will depend on the head of the concerned department that for how many months he wants to withhold the pension of the employee. The Central Government has issued orders in writing to the appointment authorities of all departments.

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New Delhi. Amidst the gifts of DA and bonus to central employees, the government has also issued a stern warning. In this, it has been said to be vigilant about work and not to be careless and in doing so, instructions have been given to stop pension and gratuity after retirement. At present, this order will be applicable to the central employees, on which the states can also implement.

The Central Government has said in a notification issued recently that if the Central employees are found guilty of any serious offense or negligence during their service, then their gratuity and pension will be stopped after retirement. These instructions have been issued under the Central Civil Services (Pension) Rule 2021. The Central Government had recently changed Rule 8 of the CCS (Pension) Rules 2021, in which these new provisions have been added.

Information about the changes in the rules from the Center has also been sent to all the concerned authorities. In this it has been said that if the information of the guilty employees is received, then action should be initiated to stop their pension and gratuity.

Who will take action

– President who has been involved in the appointing authority of the retired employee. They will have the right to stop gratuity or pension.
Secretaries who are attached to the Ministry or Department under which the retiring employee has been appointed. They will also have the right to stop pension and gratuity.
If an employee has retired from the Audit and Accounts Department, then the CAG will have the right to stop the pension and gratuity of the guilty employees after their retirement.

Such action can be taken

According to the change in the rules on October 7, the competent authorities will have the right to stop the pension or gratuity or both partly or wholly of the found guilty employees. If any departmental or judicial action is taken against these employees during the job, then it will also be necessary to inform the concerned officers. If an employee is re-employed after retirement, then the same rules will apply to him.

If an employee has taken the payment of pension and gratuity after retirement and is found guilty, then full or partial amount of pension or gratuity can be recovered from him. It will be assessed on the basis of loss caused to the department. If the authority wants, the pension or gratuity of the employee can be stopped permanently or even for some time.

Suggestions will have to be taken before the final order Any authority will have to take suggestions from the Union Public Service Commission before giving the final order. Further, in any case where pension is withheld or withdrawn, the minimum amount should not be less than Rs 9000 per month, which is already prescribed under Rule 44.

The post Retirement Pensioner: Big Alert! Government issued a warning to central employees regarding pension and gratuity, check details instantly first appeared on Rightsofemployees.com.

New Delhi. Amidst the gifts of DA and bonus to central employees, the government has also issued a stern warning. In this, it has been said to be vigilant about work and not to be careless and in doing so, instructions have been given to stop pension and gratuity after retirement. At present, this order will be applicable to the central employees, on which the states can also implement.

The Central Government has said in a notification issued recently that if the Central employees are found guilty of any serious offense or negligence during their service, then their gratuity and pension will be stopped after retirement. These instructions have been issued under the Central Civil Services (Pension) Rule 2021. The Central Government had recently changed Rule 8 of the CCS (Pension) Rules 2021, in which these new provisions have been added.

Information about the changes in the rules from the Center has also been sent to all the concerned authorities. In this it has been said that if the information of the guilty employees is received, then action should be initiated to stop their pension and gratuity.

Who will take action

– President who has been involved in the appointing authority of the retired employee. They will have the right to stop gratuity or pension.
Secretaries who are attached to the Ministry or Department under which the retiring employee has been appointed. They will also have the right to stop pension and gratuity.
If an employee has retired from the Audit and Accounts Department, then the CAG will have the right to stop the pension and gratuity of the guilty employees after their retirement.

Such action can be taken

According to the change in the rules on October 7, the competent authorities will have the right to stop the pension or gratuity or both partly or wholly of the found guilty employees. If any departmental or judicial action is taken against these employees during the job, then it will also be necessary to inform the concerned officers. If an employee is re-employed after retirement, then the same rules will apply to him.

If an employee has taken the payment of pension and gratuity after retirement and is found guilty, then full or partial amount of pension or gratuity can be recovered from him. It will be assessed on the basis of loss caused to the department. If the authority wants, the pension or gratuity of the employee can be stopped permanently or even for some time.

Suggestions will have to be taken before the final order Any authority will have to take suggestions from the Union Public Service Commission before giving the final order. Further, in any case where pension is withheld or withdrawn, the minimum amount should not be less than Rs 9000 per month, which is already prescribed under Rule 44.

The post Retirement Pensioner: Big Alert! Government issued a warning to central employees regarding pension and gratuity, check details instantly first appeared on Rightsofemployees.com.

New Delhi. Amidst the gifts of DA and bonus to central employees, the government has also issued a stern warning. In this, it has been said to be vigilant about work and not to be careless and in doing so, instructions have been given to stop pension and gratuity after retirement. At present, this order will be applicable to the central employees, on which the states can also implement.

The Central Government has said in a notification issued recently that if the Central employees are found guilty of any serious offense or negligence during their service, then their gratuity and pension will be stopped after retirement. These instructions have been issued under the Central Civil Services (Pension) Rule 2021. The Central Government had recently changed Rule 8 of the CCS (Pension) Rules 2021, in which these new provisions have been added.

Information about the changes in the rules from the Center has also been sent to all the concerned authorities. In this it has been said that if the information of the guilty employees is received, then action should be initiated to stop their pension and gratuity.

Who will take action

– President who has been involved in the appointing authority of the retired employee. They will have the right to stop gratuity or pension.
Secretaries who are attached to the Ministry or Department under which the retiring employee has been appointed. They will also have the right to stop pension and gratuity.
If an employee has retired from the Audit and Accounts Department, then the CAG will have the right to stop the pension and gratuity of the guilty employees after their retirement.

Such action can be taken

According to the change in the rules on October 7, the competent authorities will have the right to stop the pension or gratuity or both partly or wholly of the found guilty employees. If any departmental or judicial action is taken against these employees during the job, then it will also be necessary to inform the concerned officers. If an employee is re-employed after retirement, then the same rules will apply to him.

If an employee has taken the payment of pension and gratuity after retirement and is found guilty, then full or partial amount of pension or gratuity can be recovered from him. It will be assessed on the basis of loss caused to the department. If the authority wants, the pension or gratuity of the employee can be stopped permanently or even for some time.

Suggestions will have to be taken before the final order Any authority will have to take suggestions from the Union Public Service Commission before giving the final order. Further, in any case where pension is withheld or withdrawn, the minimum amount should not be less than Rs 9000 per month, which is already prescribed under Rule 44.

The post Retirement Pensioner: Big Alert! Government issued a warning to central employees regarding pension and gratuity, check details instantly first appeared on Rightsofemployees.com.

If you work in a company for 5 consecutive years, then you are considered entitled to gratuity. Gratuity is the amount given by the company to the employee as a reward. In simple words, gratuity is a reward for working in the company for a long time. It is given under a fixed formula, although if the company wants, it can also give more amount to the employee than the fixed formula. A small part of the gratuity is deducted from the salary of the employee, but a large part is given by the company. Gratuity money is given on leaving the job or at the time of retirement. If you are also a salaried person, then you must know about some rules related to gratuity. 

These rules every employee should know

• If 10 or more people work in a private or government company, then that company should give the benefit of gratuity to all the employees. Apart from the company, shops, mines, factories come under the purview of this rule. But any employee becomes entitled to gratuity only after working in that company for 5 consecutive years. If the job is of 10 or 20 years, then a good amount of gratuity is available, so that the person can fulfill all his responsibilities. 
• There is also a formula to decide how many years you have worked in an institution. If an employee has worked in the company for 4 years 8 months, then his job will be considered as full 5 years and he will get the amount of gratuity according to 5 years. If he has worked for less than 4 years 8 months, then the period of his service will be counted as 4 years and gratuity will not be available.
• The notice period of the employee is also counted in the period of gratuity. Suppose you have resigned after working in a company for four and a half years, but served a notice period of two months after the resignation. In such a situation, the period of your job will be counted as 4 years 8 months only. And assuming it to be 5 years, the amount of gratuity will be given.
• If an employee dies during the job, then the entire amount deposited in his gratuity account is given to his nominee. In such a case, the condition of minimum 5 years job does not apply.
• A formula to calculate gratuity is – (last salary) x (number of years worked in the company) x (15/26). Last salary means the average of your last 10 months salary. Basic salary, dearness allowance and commission are included in this salary. Due to 4 days of Sunday being week off in the month, 26 days are counted and gratuity is calculated on the basis of 15 days. 
• When the company or institution is not registered under the Gratuity Act, then the employees are not covered under the Gratuity Act. In such a situation, whether to give gratuity or not, it is the choice of the company. But if the company still wants to give gratuity to an employee, then its formula is different. In such a situation, the amount of gratuity will be equal to half a month’s salary for every year. But the number of working days in a month will be considered as 30 days, not 26.
• Any company can give gratuity up to a maximum of Rs 20 lakh to its employee. The amount received as gratuity is tax free. This rule applies to both government jobs and private jobs.

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Gratuity and Pension New Rule: The  Modi government has made changes in the rules of gratuity and pension to the central employees. If you made some such mistakes during your job then you may have to lose your pension and gratuity. According to media reports, if government employees do not follow the rules, then they will not get pension and gratuity after their retirement.

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Gratuity and Pension New Rule: After giving DA (Dearness allowance – DA) and Diwali bonus to the central employees, the Modi government has changed the rules of gratuity and pension. The government has also given a warning along with the rules made for the employees. According to media reports, if you do not follow the rules, then they will not get pension and gratuity after their retirement.

If such negligence – then you will not get pension

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New Delhi. Amidst the gifts of DA and bonus to central employees, the government has also issued a stern warning. In this, it has been said to be vigilant about work and not to be careless and in doing so, instructions have been given to stop pension and gratuity after retirement. At present, this order will be applicable to the central employees, on which the states can also implement.

The Central Government has said in a notification issued recently that if the Central employees are found guilty of any serious offense or negligence during their service, then their gratuity and pension will be stopped after retirement. These instructions have been issued under the Central Civil Services (Pension) Rule 2021. The Central Government had recently changed Rule 8 of the CCS (Pension) Rules 2021, in which these new provisions have been added.

Information about the changes in the rules from the Center has also been sent to all the concerned authorities. In this it has been said that if the information of the guilty employees is received, then action should be initiated to stop their pension and gratuity.

Who will take action

– President who has been involved in the appointing authority of the retired employee. They will have the right to stop gratuity or pension.
Secretaries who are attached to the Ministry or Department under which the retiring employee has been appointed. They will also have the right to stop pension and gratuity.
If an employee has retired from the Audit and Accounts Department, then the CAG will have the right to stop the pension and gratuity of the guilty employees after their retirement.

Such action can be taken

According to the change in the rules on October 7, the competent authorities will have the right to stop the pension or gratuity or both partly or wholly of the found guilty employees. If any departmental or judicial action is taken against these employees during the job, then it will also be necessary to inform the concerned officers. If an employee is re-employed after retirement, then the same rules will apply to him.

If an employee has taken the payment of pension and gratuity after retirement and is found guilty, then full or partial amount of pension or gratuity can be recovered from him. It will be assessed on the basis of loss caused to the department. If the authority wants, the pension or gratuity of the employee can be stopped permanently or even for some time.

Suggestions will have to be taken before the final order Any authority will have to take suggestions from the Union Public Service Commission before giving the final order. Further, in any case where pension is withheld or withdrawn, the minimum amount should not be less than Rs 9000 per month, which is already prescribed under Rule 44.

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After the DA is 34 to 38 percent, there is a possibility of increasing the allowances of central employees soon. Central employees can get the benefit of increase in four allowances simultaneously. After getting 38 percent dearness allowance, according to the Seventh Pay Commission, the travel allowance and city allowance of the central employees will also increase. 

Along with this, Provident Fund and Gratuity will also increase automatically. Actually, the monthly PF and gratuity of central employees is calculated from the basic salary and DA. In such a situation, due to increase in DA, PF and Gratuity are also sure to increase.

Not only this, due to increase in DA, the House Rent Allowance (HRA) of central employees will also increase. It is being told that this increase can be up to 3 percent. Let us tell you that on 28 September 2022, the Central Government increased the Dearness Allowance (DA) of central employees by 4 percent. 

Due to this, the DA of central employees has increased from 34 to 38 percent. Central employees and pensioners are now getting DA and DR at the rate of 38 percent. 50 lakh employees and 65 lakh pensioners have directly benefited from this announcement of the central government. Meanwhile, the central employees’ organizations have once again increased the pressure on the government for the arrears of 18 months. 

These people say that the ruling of the Supreme Court is that salary and allowance are the rights of the employees and it cannot be stopped. In such a situation, there is a pressure to pay the arrears of DA arrears from January 2020 to June 2021. In such a situation, good news can also be heard about the DA arrears of central employees.

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It is being said that there may be a new condition for one year’s job instead of 5 for gratuity, but no statement has come from the government in this regard yet.

Gratuity is available on a job of 5 years

Actually, gratuity is given to the employee for working more than 5 years in a company. It is given to the employees under a fixed formula. During work, a small part of gratuity is deducted from the salary of the employee and a large part is given by the company.

Waiting for the implementation of the new wage code, let us tell you that everyone is waiting for the new wage code. Updates keep coming from time to time regarding this. Recently, during the monsoon session of Parliament, Minister of State for Labor Rameshwar Teli had told that no deadline has been fixed yet, but efforts are being made to implement it as soon as possible. He had told that comments on different codes have not been received from many states.

Wage codes will be implemented in a phased manner According to media reports, it is planned to implement them sequentially from October 1, 2022. That is, on the basis of the number of drafts ready, different codes will be implemented in a phased manner.

Let us inform that 4 new codes have been created by combining 29 central labor laws. These include the Industrial Relations Code, Code on Occupational Safety, Health and Working Conditions Code, Social Security Code and Code on Wages.

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Apart from this, revision in HRA of central employees will also be done on time. Its benefit will be more than 47.68 lakh central employees and more than 68.52 lakh pensioners. There will be a jump in salary from 20 thousand to 2.50 lakh.

Dearness allowance will increase by 4%?

The Modi government at the Center can announce an increase in 4% dearness allowance and dearness relief for the second half in August.

After the release of the June data of the AICPI index, it is believed that the DA of the employees will increase by 4 to 5%. If it is implemented from July 1, then the arrears of July-August will also be available.

If the basic salary of a central employee is Rs 20,000 per month, then at the current rate of 34 per cent, he is getting DA of Rs 6,800 per month, then at 38 per cent, the amount will increase by Rs 800 per month to 7,600. That is, you will get a profit of Rs 9,600 annually, according to this, the annual DA of an employee with basic salary of Rs 20,000 will be Rs 91,200.

If we look at the maximum basic salary of Rs 56,900, then the total increase in annual dearness allowance will be Rs 27312. That means Rs 2276 will increase every month against the existing DA. His total annual DA will reach Rs 2 lakh 59 thousand 464.

Fitment factor also expected to increase

According to the recent reports, along with DA, HRA, central employees have been waiting for an increase in the fitment factor for a long time. Now that the increase in DA has been announced, then their hope has got wings.

It is expected that soon the government can also take a big decision on the fitment factor of central employees. The fitment factor plays an important role in the salary received by the employees. Due to this factor, the salary of central employees increases by more than two and a half times.

Possible increase in house rent allowance?

Currently, HRA rates are 27%, 18% and 9% depending on the category of the city, it is possible to increase it up to 3%. It is believed that soon the HRA of X category employees can be increased by 3 percent, Y category HRA by 2 percent and for Z category 1 percent HRA can be increased. Thereafter, it will increase from 27% to 30%, although this will be in case the DA rises from 34 per cent to 50 per cent.

According to the 7th Pay Matrix, the maximum basic salary of employees is Rs 56,900, then if HRA is 27 percent, there will be a profit of 20,484 in the salary. For example, house rent allowance is Rs 56900 x 27/100 = Rs 15363 per month, then 30% HRA If it is Rs 56,900 x 30/100 = Rs 17,070 per month, that means the total difference will be Rs 1707 per month.

The annual HRA will increase by Rs 20,484. These rates vary according to the area and city, currently the minimum HRA for all three categories is Rs 5400, 3600 and 1800. According to the same 7th Pay Matrix, the minimum salary of employees is Rs 18000 and maximum basic salary is Rs 56,900.
rising demand to increase

It is worth noting that there has been a long-standing demand of central employees to increase their fitment factor from 2.57 per cent to 3.68 per cent. After this, there will be a tremendous increase in the minimum salary of the employees.

Let us tell you that the last time the fitment factor was increased in the year 2016. The 7th Pay Commission was also implemented in the same year. At that time the minimum salary of the employees had gone straight from Rs 6000 to Rs 18,000.

Now the government can increase the salary of central employees again this year. The fitment factor decides the basic salary for all central government employees. This time, if there is a possible increase in the fitment factor, then the minimum basic pay will increase from Rs 18,000 to Rs 26,000.

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After the implementation of the new labor law, there will be a change in the salary, leave, provident fund and gratuity of the employees. After the implementation of these laws, the obligation of working for 5 consecutive years in any institution for gratuity will end. However, so far no formal announcement has been made by the government on this. But, it is certain that this system will be implemented as soon as the new labor law is implemented. 

How much gratuity do you get now?

According to the rules related to gratuity, gratuity is available on completion of 5 years in any institution. Gratuity is calculated on the basis of your Basil salary for the month on which you leave the company on completion of 5 years. For example A worked in a company for 10 years.

In the last month, 50 thousand rupees had come in A’s account. In this his basic salary is 20 thousand rupees. 6 thousand is his dearness allowance. Gratuity will be calculated on the basis of 26 thousand (basic and dearness allowance). 26 working days are considered in gratuity. Now divide 26 thousand by 26.

The result turned out to be Rs 1000. Now it has to be multiplied by 15 days because it is added to the number of 15 days in a year. The result will be 15000. If he worked for 5 years, then he would get total 75000 rupees as gratuity. mention of gratuity in social security bill The rules for gratuity have been given in Chapter 5 of the Social Security Bill, 2020.

Apart from salary, pension and provident fund, gratuity is also given to the employees who have worked for a long time in the same company. Gratuity is a reward given to the employee of the company. If the employee fulfills certain conditions of the job, then he is paid guaranteed gratuity as per the prescribed formula. A small part of the gratuity is deducted from the employee’s salary, but the company pays a major portion.

Gratuity can be given even on 1 year job

According to the information given in the draft copy filed in the Lok Sabha, if an employee works in any place for one year, then he will be entitled to gratuity. The government has made this arrangement for fixed term employees i.e. those working on contract. If a person works on a contract with a company for a fixed period of one year, he will still get gratuity. The contract worker is now being given the right of social security like a regular employee. Apart from contract employees, those working in seasonal establishments will also get the benefit of this.

Who will benefit from Gratuity Act 2020?

The benefit of Gratuity Act 2020 will be available only to fixed term employees. The Old Testament will continue for others as well. At present, gratuity is fixed on the basis of 15 days’ salary every year on completion of five years of service. Gratuity is given to the employees by the company. Its maximum limit is 20 lakh rupees.

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Allowance for foreign services

If, you are in a government job and your appointment is outside the country and any allowance is received in lieu of it, then income tax will not be applicable on it. In section 10(7) of Income Tax, it has been provided that the employees working in government service who are rendering their services abroad and are getting allowance in return for them, then they will be tax free.

Income from gratuity

A part of the salary of salaried employees is deducted as gratuity. The company pays gratuity to the employee after working for a specified period. Gratuity income is completely tax free.

Income from voluntary retirement

Income from voluntary retirement up to Rs 5 lakh is tax free. According to Section 2BA of Income Tax, if a person takes voluntary retirement from any company or local authority, then the income from this will get tax exemption of up to Rs 5 lakh.

Income from agriculture

The government does not charge tax on income from agriculture. Income from agriculture is exempted from tax under section 1961 of Income Tax. Tax exemption is available on income from agriculture. Taxpayer can get tax exemption by showing income from agriculture in his return.

Income from savings account

If the interest earned from the savings account is less than Rs 10,000, then there is no tax to be paid on it. This exemption is also available on interest earned from more than one account. If, you have more than one bank account and they get interest of Rs 10000 and Rs 5000 respectively, then your taxable income will be Rs 5000.

Share of partnership firm

If, you are a partner in a partnership firm and you own its shares, then as per section 10(2) of the Income Tax, the partner is not liable to pay income tax for the income earned in the firm. Apart from shares, if you take remuneration or other benefits, then this income will come under the purview of taxable income.

Long term capital gain

Tax exemption is available on long-term capital gains made on investments made in equity or mutual funds. According to section 10(36) of Income Tax, if capital gains are made by selling shares or mutual funds for a period of more than one year, then it is eligible for income tax exemption. However, this is not applicable to debt mutual funds and the income generated from it is taxable.

Scholarship or award

There is no income tax on any kind of scholarship or award. Income tax is not charged on the amount received under the scholarship or award under the Income Tax Act 1961. The amount of the scholarship or award has not been fixed.

Senior Citizen Saving Scheme

If you are a senior citizen and you have invested in Senior Citizen Saving Scheme (SSSS), then your principal amount will not be taxed. However, you may have to pay tax on its interest income. Also, keep in mind that you have to mention this in your income tax return as well.

Provident fund income

According to section 10 (11, 12, 13) of Income Tax, income tax is not to be paid on such income which comes from PPF, PF or retirement fund.

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In the country, the pension of people who have received gallantry awards like Maha Vir Chakra, Param Vir Chakra and Vir Chakra is not taxed. Apart from this, the family pension of such people is also tax free.

Scholarship

Although scholarship is given by the state and central government, but it is also considered as income in a way. But the important thing is that there is no income tax on it. Under Section 56 (ii) of Income Tax, the money received from the scholarship is tax free.

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Allowance for foreign services

If, you are in a government job and your appointment is outside the country and any allowance is received in lieu of it, then income tax will not be applicable on it. In section 10(7) of Income Tax, it has been provided that the employees working in government service who are rendering their services abroad and are getting allowance in return for them, then they will be tax free.

Income from gratuity

A part of the salary of salaried employees is deducted as gratuity. The company pays gratuity to the employee after working for a specified period. Gratuity income is completely tax free.

Income from voluntary retirement

Income from voluntary retirement up to Rs 5 lakh is tax free. According to Section 2BA of Income Tax, if a person takes voluntary retirement from any company or local authority, then the income from this will get tax exemption of up to Rs 5 lakh.

Income from agriculture

The government does not charge tax on income from agriculture. Income from agriculture is exempted from tax under section 1961 of Income Tax. Tax exemption is available on income from agriculture. Taxpayer can get tax exemption by showing income from agriculture in his return.

Income from savings account

If the interest earned from the savings account is less than Rs 10,000, then there is no tax to be paid on it. This exemption is also available on interest earned from more than one account. If, you have more than one bank account and they get interest of Rs 10000 and Rs 5000 respectively, then your taxable income will be Rs 5000.

Share of partnership firm

If, you are a partner in a partnership firm and you own its shares, then as per section 10(2) of the Income Tax, the partner is not liable to pay income tax for the income earned in the firm. Apart from shares, if you take remuneration or other benefits, then this income will come under the purview of taxable income.

Long term capital gain

Tax exemption is available on long-term capital gains made on investments made in equity or mutual funds. According to section 10(36) of Income Tax, if capital gains are made by selling shares or mutual funds for a period of more than one year, then it is eligible for income tax exemption. However, this is not applicable to debt mutual funds and the income generated from it is taxable.

Scholarship or award

There is no income tax on any kind of scholarship or award. Income tax is not charged on the amount received under the scholarship or award under the Income Tax Act 1961. The amount of the scholarship or award has not been fixed.

Senior Citizen Saving Scheme

If you are a senior citizen and you have invested in Senior Citizen Saving Scheme (SSSS), then your principal amount will not be taxed. However, you may have to pay tax on its interest income. Also, keep in mind that you have to mention this in your income tax return as well.

Provident fund income

According to section 10 (11, 12, 13) of Income Tax, income tax is not to be paid on such income which comes from PPF, PF or retirement fund.

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When will the new labor code be implemented? This question is booming in the mind of most of the employed. This code, which came into force from 1 April 2021, is being carried forward continuously. There are many speculations. But, the government has not given any formal deadline yet. However, according to sources in the Ministry of Labor, planning is underway to implement it from October 1, 2022. With the coming of the new wage code, there will be many changes. Let us know what is the update for you…

New Wage Code will be implemented in phases

If sources are to be believed, the New Wage Code can be implemented from October. But, it will not be implemented directly. It will be implemented in a sequential manner. Meaning the notification will be issued for this before October 1, 2022. It will be deemed to be applicable from 1 October 2022. But, the states have been relaxed in this. States can also implement a slight delay at their level. However, the final deadline will be worked out.

New wage code may be implemented from October

If sources are to be believed, the central government is ready to notify the New Wage Code. The central government does not want to issue notifications without the consent of the states. Therefore, the states will have the freedom to implement it in different phases. The draft rules are almost ready. New Wage Code can be implemented from October 2022.

What is the New Wager Code?

The government has made 4 new codes by combining 29 central labor laws. These include the Industrial Relations Code, Code on Occupational Safety, Health and Working Conditions Code (OSH), Social Security Code and Code on Wages. But, the biggest change is in the definition of ‘wage’. It has been expanded. The new labor code is aimed at consolidation. 50% of the salary will be directly included in the wages. Let us tell you, new laws related to labor reforms have been passed by the Parliament. Now to implement them.

How will the salary structure change?

According to the New Wage Code Act 2019, the basic salary of an employee cannot be less than 50% of the cost of the company (CTC). At present, many companies reduce the basic salary and give more allowances from above so that the burden on the company is reduced. With the implementation of the New Wage Code, the salary structure of the employees will change completely. The ‘Take Home Salary’ of the employees will decrease, because by increasing the Basic Pay, the PF of the employees will be deducted more, that is, their future will be more secure.

Rules of holidays, pension and working hours will change

According to EPFO ​​board member and Bharatiya Mazdoor Sangh general secretary Virjesh Upadhyay, social security is very important for employees. There are many important aspects to this. There is to be a change in the rules on important issues like working hours of employees, annual holidays, pension, PF, take home salary, retirement.

There will also be a change in PF, Gratuity

Contribution to gratuity will also increase along with Provident Fund. Take home salary will definitely decrease but the employee will get more amount on retirement. The New Wage Code 2022 will also be applicable for the employees of the unorganized sector. The rules related to salary and bonus will change and there will be equality in the salary of employees working in every industry and sector.

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It is not the constitution of the establishment as to whether it is a public limited company, private limited company, cooperative society, partnership or proprietory form that decides the working hours, leaves and other service conditions of the employees but it is the labour laws applicable to the kind of business being transacted that decides these matters.

Different Acts have set out different rules pertaining to hours of work and the spread over of work with slight changes as applicable to the respective state. Shops and Establishments Act being a state Act is confined only to that state whereas the other Acts are central Acts and will be similar in many respect subject to state rules attached thereto.

Laws Lined Up for 2018                   

Enhancement of the gratuity ceiling: The Payment of Gratuity Act, 1972 (“Gratuity Act”) entitles employees who have been in continuous employment for a period of 5 years to gratuity at the rate of 15 days wages for every year of continuous service, capped at INR 10,00,000. The Payment of Gratuity (Amendment) Bill, 2017 (“Gratuity Bill”) was introduced in the Lower house of Parliament (Lok Sabha) on December 18, 2017 with a view to allow the Government the discretion to (i) prescribe the gratuity ceiling, and (ii) the period of maternity leave that would deemed to constitute continuous service.  It is anticipated that the Gratuity Bill will be passed by the Lower house in the next session of Parliament and that the ceiling is likely to be enhanced from INR 10,00,000 to INR 20,00,000.

Consolidation of Labour Laws: As part of its election manifesto, the current Government had promised to review the Indian employment laws to reduce the multiplicity of employment legislations and keep the legislations in sync with the requirements of the evolving labour market. In furtherance of the same, the Government has sought to consolidate 44 central employment laws into 4 labour codes:

1. Labour Code on Industrial Relations — Consolidating the Industrial Disputes Act, 1947, the Industrial Employment (Standing Orders) Act, 1946 and the Trade Unions Act, 1926;
2. Labour Code on Social Security and Welfare — Consolidating social security laws such as the Employees Provident Funds and Miscellaneous Provisions Act, 1952, the Employees State Insurance Act, 1948, Maternity Benefit Act, 1961, the Employees Compensation Act, 1923, etc.;
3. Code on Wages — Consolidating the Minimum Wages Act, 1949, the Payment of Wages Act, 1936, Payment of Bonus Act, 1965 and Equal Remuneration Act, 1976; and
4. Labour Code on Occupational Safety, Health & Working Conditions.

The code that is likely to come into effect soon is the Code of Wages, 2017 (“Wage Code”). It is anticipated that the Government was working towards having the Wage Code passed in the lower house (Lok Sabha) of Parliament in the budget session and this might be taken up in the next session of Parliament.

National Employment Policy: The Government of India has proposed the introduction of a National Employment Policy to address the growing rate of unemployment in India. The proposed aim of the National Employment Policy is to create a comprehensive action plan to ensure that quality jobs are created across various sectors. It appears that this would be done by incentivizing employers to hire, by allowing relaxations in employment law compliances or bearing a part of the cost for social security payments.

LGBTIQ Rights: The Supreme Court of India, in its landmark judgment in August 2017, observed that the right to privacy and the protection of sexual orientation lie at the core of the fundamental rights guaranteed by Articles 14, 15 and 21 of the Indian Constitution. Further, the Supreme Court on January 8, 2018, stated that it would review its position on Section 377 of the Indian Penal Code, 1860, i.e., the criminalization of sexual intercourse between consenting adults of the same sex. With respect to transgender persons, the Transgender Persons (Protection of Rights) Bill, 2016, inter alia, seeks to prohibit the discrimination of transgender persons in terms of employment, healthcare services and access to facilities.

Law Governing Factories: Amendments to the Factories Act, 1948, has been in the pipeline for the past two years. The amendments are primarily aimed at allowing the state government to increase the number of overtime hours that employees can work and prescribe rules in relation to exemptions that could be given to various categories of employees. These measures would allow flexibility to State Governments to undertake initiatives to encourage the development of industries.

Changes to the Law on Contract Labour: The Government has released a draft bill for the amendment of the law governing the engagement of contract labour in India – the Contract Labour (Regulation and Abolition) Act, 1970 (“CLRA”). The bill primarily intends to exclude workers who are regularly employed in the establishment of the contractor from the definition of the term ‘contract labour’ for the purposes of the CLRA.

2018 Budget Proposals to Provident Fund Contributions: The Finance Minister in his 2018 Budget speech has proposed that the Government will make provident fund contributions of 12 percent of wages for new employees for a period of three years and reduce the mandatory contribution limit from 12 percent to 8 percent for women employees for the first three years of employment. We would, however, have to wait for amendments to be made to the Employees Provident Funds and Miscellaneous Provisions Act, 1952, and allied schemes, to understand the manner in which these proposals will be implemented.

Most Indian employment laws were drafted primarily for traditional models of workforce engagement in sectors such as manufacturing and infrastructure. These laws are failing to keep pace with the needs of new and emerging sectors that are driven by cutting edge technology, increased automation and creative forms of workforce engagement, including gig/on-call working. While the above reforms are much needed, standing at the threshold of the artificial intelligence revolution, India needs to relook at its employment laws to ensure that businesses are not constrained, innovation and entrepreneurship are encouraged and employee rights are not compromised.

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