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New Delhi: After the new labour codes implementation, the calculation of gratuity is going to change completely. The biggest change is that now contract employees will get gratuity after one year of service. Also, with the implementation of the 50 percent wage rule, the base salary of gratuity will also increase. These changes will also increase the amount deducted on PF, NPS and gratuity, which will strengthen your retirement savings.
In the new rules, the condition of five years of service for permanent employees is the same as before. But fixed-term employees i.e. contract workers will now be entitled to gratuity in just one year. The method of calculation will be the same for both, the difference is only in the service period.
50% wage rule
| Shift | Effect |
|---|---|
| increase in basic pay | Wages will conform to the 50% rule |
| PF contribution will increase | Retirement fund will be strong |
| NPS contribution will increase | Long-term savings will increase |
| Gratuity will increase | More profit every year |
| Tax Impact | Depends on the salary structure of the company |
According to the report of the Economic Times Wealth, the wages in the new code will include basic, dearness allowance and retaining allowance and this should be at least 50 percent of the total salary. If your exclusive allowance like HRA, special allowance etc. is more than 50 percent, then the plus amount will be added back to the basic. Due to this, the salary in the calculation of gratuity will increase.
CTC 6 Lakh
| Details | Old Testament | New Testament |
|---|---|---|
| CTC | Rs 6,00,000 | Rs 6,00,000 |
| Basic Veg | Rs 3,00,000 | Rs 3,95,000 |
| annual gratuity | Rs 14,430 | Rs 19,000 |
| Growth | — | More profits |
CTC 12 lakh
| Details | Old Testament | New Testament |
|---|---|---|
| CTC | Rs 12,00,000 | Rs 12,00,000 |
| Veg | Rs 6,00,000 | Rs 7,90,000 |
| annual gratuity | Rs 28,860 | Rs 37,999 |
| Benefit | — | a substantial increase |
CTC Rs 24 Lakh
| Details | Old Testament | New Testament |
|---|---|---|
| CTC | Rs 24,00,000 | Rs 24,00,000 |
| Veg | Rs 12,00,000 | Rs 15,80,000 |
| annual gratuity | Rs 57,720 | Rs 75,998 |
| Growth | — | more benefit |
