7th Pay Commission: SALARIED CLASS? This new Bill to affect your salary, DA, TA, HRA—check how

As per the Wage Code Bill 2021, an employee’s monthly basic salary can’t be less than 50 per cent of the net CTC.  In other words, the Central government’s New Wage Code Bill 2021 will not allow employees’ allowances such as Dearness Allowance (DA), House Rent Allowance (HRA), Travel Allowance (TA), etc. to be more than 50 per cent of net CTC.  Source: PTI

Tax and investment experts say that a central government employee’s basic salary has direct impact on PF and Gratuity while allowance like DA, TA, HRA plays a major role in one’s salary. So, a central government and private sector employees’ PF, Gratuity, DA, TA, HRA will get changed if the New Wage Code 2021 is implemented from April 1, 2021.  Source: PTI

As one employee’s monthly PF contribution and Gratuity is a part of his/her monthly basic salary, if the New Wage Code Bill 2021 is implemented, it will lead to change in one’s monthly PF and Gratuity contribution.  Source: Reuters

However, it is yet to be seen whether the wage code will be implemented from April 1, 2021 or not as the government is yet to make any official announcement regarding the implementation of the new wage code and when it will be implemented. Source: Reuters  

On how the New Wage Code will lead to change in the monthly allowances like DA, TA, HRA, etc. SEBI registered tax and investment expert Jitendra Solanki said, "The New Wage Code caps the allowance head at 50 per cent of the net monthly CTC, which means one's monthly allowance can't be more than 50 per cent of its net CTC. Since DA, TA, HRA, etc. fall under the allowance heads. They are bound to get affected once the New Wage Act 2021 gets implemented."  Source: Reuters