An Update on the New Wage Policy - Professor Vidya Mahambare

The maze of exclusions and inclusions have left the salaried employee confused and anxious, says Prashant Sawant, who had co-founded Catalyst Wealth. “Most of the organisations have their basic salaries lying somewhere around 35 per cent to 45 percent of the total cost to the company. This will change now. The basic salary will now have to be a minimum of 50 per cent of the CTC. Allowances such as HRA, leave travel and conveyance will have to be restricted to 50 per cent of the CTC,” he says. Since the basic pay forms the basis for provident fund as well as gratuity contributions, any increment to the same in order to adjust allowance payments exceeding 50 per cent of the CTC, as the new law mandates, would have a direct bearing on both these contributions.