New labour laws: Here's how much your take-home pay changes for ₹10 lakh CTC

With the new Labour Laws coming into effect from 1 April, the biggest change for post salaried individuals is in their pay structure. The shift is primarily towards long-term and retirement savings, which means your current in-hand compensation may dip.

As per the Centre, focus is on helping salaried individuals save for their retirement to sustain a healthy life following their superannuation. More funds in retirement funds also mean that one can withdraw higher amounts later in life.

What has changed for your salary break-up?

The reforms have issued a “uniform definition of wages”, according to which wages now include basic pay, dearness allowance (DA), and retaining allowance. Now, these three components are mandated to comprise at least 50% of an employee's total remuneration. At the same time, other components such as bonuses, HRA, and special allowances are classified as exclusions.

However, if these excluded components exceed 50% of the total salary, the excess amount must be added back to wages. This effectively raises the basic wage component for many employees.

Because several statutory benefits are calculated on wages, the change can increase employer and employee contributions to the Employees' Provident Fund Organisation (EPF) and may also affect benefits linked to wage calculations under the Employees' State Insurance Corporation (ESIC).

As a result, retirement and social security benefits such as provident fund, gratuity, and insurance coverage could increase, while take-home pay for employees may decline slightly due to higher deductions.

₹10 lakh CTC: Here's how your salary will change

Let's assume that you have a CTC of ₹10 lakh. Here is how your monthly take home salary will change after the implementation of the labour laws —

In this scenario, your take home salary drops by ₹1,100 per month after restructuring to comply with new Basic Pay rule. It must be noted that all these calculations are before tax. The actual salary may change when you factor taxes in.

Retirement savings increase

While this may seem like a bad thing in the short run, over the longer term, this will be beneficial for your retirement savings. You will be contributing ₹15,000 more per year to your provident fund. Meanwhile, your gratuity after just one year of service will increase to ₹13,221.

According to CA Chandni Anandan, Tax Expert at Clear Tax, the shift is better viewed as a reallocation of compensation rather than a net cut.

“The more the salary is routed into protected, long‑term benefits, while the overall cost to the employer often remains comparable. For salaried taxpayers, the impact can be managed through smarter tax planning- leveraging investments under Sections 80C and 80D, optimising HRA and other eligible benefits, and using the new regime’s higher standard deduction- so that the tax outflow is optimised to the fullest extent,” she added.

How to calculate your take home salary?

You can calculate your take home salary in a few seconds with the Mint salary calculator by clicking on this link https://www.livemint.com/tools-calculators/salary-impact-tracker. You can either upload your payslip or write your salary components manually. Then click on the “Calculate My Impact” button to view your take home salary changes instantly without any hustle.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.