CTC Calculator Under New Labour Code India 2026
How Your Salary Breakup Changes
The new Labour Code mandates Basic ≥ 50% of wages. Your PF stays capped at ₹1,800/month for most salaries. When employers hold CTC constant, higher gratuity provision means slightly lower gross salary. See exact numbers for your range.
📌
What Changed50% Basic Rule
Basic salary must now be ≥ 50% of total wages under the new Code on Wages.
🔒
Key FactPF Still Capped
PF is capped at ₹15,000 basic. Max employee PF = ₹1,800/month. Does NOT increase for CTC ≥ ₹3.6 LPA.
📈
Net ImpactGratuity Provision Rises
Gratuity is an employer cost at 4.81% of Basic. Higher Basic → larger employer gratuity provision within CTC. Not a salary deduction.
🔒 PF Is Capped at ₹15,000 Basic — Does Not Increase for Most Employees
Many employees fear their PF will spike under the new Labour Code. Here is the exact rule:
Employee PF = MIN(Basic, ₹15,000) × 12%
Maximum Employee PF = ₹15,000 × 12% = ₹1,800/month (hard cap)
When PF INCREASES
Only when old Basic was below ₹15,000 AND the new 50% rule pushes Basic above ₹15,000. The cap then kicks in — PF does not grow beyond ₹1,800/month even after this.
Annual CTC < ₹3.6 LPA → PF may increase slightly
When PF stays SAME
When Basic already exceeds ₹15,000 in both old and new structure — the ₹1,800 cap always applied and continues to apply. No change.
Annual CTC ≥ ₹3.6 LPA → PF stays ₹1,800/month
📌 Clarification: Gratuity Is an Employer Cost — Not a Salary Deduction
Gratuity is not deducted from your salary. It is an employer-side obligation — the employer sets aside approximately 4.81% of your Basic salary each month as a future gratuity liability. This amount is part of your CTC but is never deducted from your monthly pay slip.
What Actually Changes in CTC Under New Labour Code
| Component | Old Structure (Basic ~40%) | New Structure (Basic 50%) | Impact |
|---|---|---|---|
| Basic Salary | ~30–40% of CTC | ≥ 50% of wages | ⬆️ Increases |
| HRA | 40–50% of old Basic | 50% of new higher Basic | ⬆️ Increases |
| Special Allowance | High balance amount | Smaller balance | ⬇️ Decreases |
| Employee PF | 12% of Basic (cap ₹15,000) | 12% of Basic (same cap) | ➡️ Same for CTC ≥ ₹3.6L |
| Employer PF | 12% of Basic (cap ₹15,000) | 12% of Basic (same cap) | ➡️ Same for CTC ≥ ₹3.6L |
| Gratuity Provision (Employer) | 4.81% of old Basic — employer cost | 4.81% of new higher Basic — employer cost | ⬆️ Employer sets aside more |
| Gross Salary (if CTC fixed) | Higher (lower gratuity provision) | Slightly lower (more CTC goes to gratuity) | ⬇️ Slight reduction |
| Net Take-Home (if CTC fixed) | Higher | ₹200–₹600/month lower | ⬇️ Slight drop (see note) |
| HRA Tax Exemption | Lower HRA = less exempt | Higher HRA = more exempt | ✅ Better (rent payers) |
| Income Tax on Special | High taxable Special Allowance | Lower taxable Special Allowance | ✅ May reduce tax liability |
⚠️ Note: Take-home reduces only when total CTC is held constant by the employer. If your employer increases gross salary to compensate, your take-home may stay the same or improve. Gratuity is never deducted from your monthly pay slip.
📋 About These Examples
The salary comparison tables below are illustrative examples based on standard assumptions. Actual outcomes depend on your employer's salary structure policy.
- •Basic salary is set at exactly 50% of monthly CTC in the new structure (minimum required under the new Code on Wages).
- •HRA is 50% of Basic (applicable for metro cities — Delhi, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad).
- •Employee PF contribution is capped at ₹15,000 Basic wage — maximum deduction ₹1,800/month regardless of actual Basic.
- •Employer gratuity provision is calculated at ~4.81% of Basic per month. This is an employer cost within CTC — not deducted from employee pay.
- •Professional Tax assumed at ₹200/month. Medical Allowance ₹1,250 and Conveyance Allowance ₹1,600 assumed fixed.
- •Total CTC is held constant — meaning higher gratuity provision reduces the gross salary component, which lowers take-home.
Before vs After — Every CTC Range
Based on assumptions listed above. PF capped at ₹15,000 Basic (max ₹1,800/month). Gratuity shown as employer provision within CTC — not an employee deduction.
₹3,00,000 Annual CTC
₹25,000/month
Take-Home Change
-₹720/month
| Component | Old (Basic ~40%) | New (Basic 50%) | Change |
|---|---|---|---|
| Basic Salary | ₹10,000 | ₹12,500 | ⬆️ Higher |
| HRA | ₹5,000 | ₹6,250 | ⬆️ Higher |
| Special Allowance | ₹9,238 | ₹5,447 | ⬇️ Lower |
| Employer PF | ₹1,200 | ₹1,500 | ⬆️ Increased |
| Gratuity Provision (Employer Cost) | ₹481 | ₹601 | ⬆️ Higher provision |
| Gross Salary | ₹24,319 | ₹23,899 | ⬇️ Slightly lower |
| Employee PF Deduction | ₹1,200 | ₹1,500 | ⬆️ Increased |
| Net Take-Home | ₹22,919 | ₹22,199 | -₹720/month |
⚠️ Employee PF increases here — old Basic was below ₹15,000. The new 50% rule raises Basic above ₹15,000, triggering the PF cap for the first time. From this point forward, PF stays fixed at ₹1,800/month regardless of further Basic increases.
₹3,60,000 Annual CTC
₹30,000/month
Take-Home Change
-₹865/month
| Component | Old (Basic ~40%) | New (Basic 50%) | Change |
|---|---|---|---|
| Basic Salary | ₹12,000 | ₹15,000 | ⬆️ Higher |
| HRA | ₹6,000 | ₹7,500 | ⬆️ Higher |
| Special Allowance | ₹10,983 | ₹4,978 | ⬇️ Lower |
| Employer PF | ₹1,440 | ₹1,800 | ⬆️ Increased |
| Gratuity Provision (Employer Cost) | ₹577 | ₹722 | ⬆️ Higher provision |
| Gross Salary | ₹27,983 | ₹27,478 | ⬇️ Slightly lower |
| Employee PF Deduction | ₹1,440 | ₹1,800 | ⬆️ Increased |
| Net Take-Home | ₹26,343 | ₹25,478 | -₹865/month |
⚠️ Employee PF increases here — old Basic was below ₹15,000. The new 50% rule raises Basic above ₹15,000, triggering the PF cap for the first time. From this point forward, PF stays fixed at ₹1,800/month regardless of further Basic increases.
₹6,00,000 Annual CTC
₹50,000/month
Take-Home Change
-₹240/month
| Component | Old (Basic ~40%) | New (Basic 50%) | Change |
|---|---|---|---|
| Basic Salary | ₹20,000 | ₹25,000 | ⬆️ Higher |
| HRA | ₹10,000 | ₹12,500 | ⬆️ Higher |
| Special Allowance | ₹15,238 | ₹6,648 | ⬇️ Lower |
| Employer PF (capped ₹15K) | ₹1,800 | ₹1,800 | ➡️ Same (capped) |
| Gratuity Provision (Employer Cost) | ₹962 | ₹1,202 | ⬆️ Higher provision |
| Gross Salary | ₹47,238 | ₹46,998 | ⬇️ Slightly lower |
| Employee PF Deduction | ₹1,800 | ₹1,800 | ➡️ Same (capped) |
| Net Take-Home | ₹45,238 | ₹44,998 | -₹240/month |
✅ Employee PF unchanged — Basic exceeds ₹15,000 in both old and new structure. The ₹1,800 cap applies in both cases. The take-home difference here is entirely due to higher employer gratuity provision absorbing more of the fixed CTC — not a pay deduction.
₹8,40,000 Annual CTC
₹70,000/month
Take-Home Change
-₹337/month
| Component | Old (Basic ~40%) | New (Basic 50%) | Change |
|---|---|---|---|
| Basic Salary | ₹28,000 | ₹35,000 | ⬆️ Higher |
| HRA | ₹14,000 | ₹17,500 | ⬆️ Higher |
| Special Allowance | ₹22,597 | ₹13,648 | ⬇️ Lower |
| Employer PF (capped ₹15K) | ₹1,800 | ₹1,800 | ➡️ Same (capped) |
| Gratuity Provision (Employer Cost) | ₹1,347 | ₹1,684 | ⬆️ Higher provision |
| Gross Salary | ₹65,853 | ₹65,516 | ⬇️ Slightly lower |
| Employee PF Deduction | ₹1,800 | ₹1,800 | ➡️ Same (capped) |
| Net Take-Home | ₹63,853 | ₹63,516 | -₹337/month |
✅ Employee PF unchanged — Basic exceeds ₹15,000 in both old and new structure. The ₹1,800 cap applies in both cases. The take-home difference here is entirely due to higher employer gratuity provision absorbing more of the fixed CTC — not a pay deduction.
₹10,00,000 Annual CTC
₹83,333/month
Take-Home Change
-₹401/month
| Component | Old (Basic ~40%) | New (Basic 50%) | Change |
|---|---|---|---|
| Basic Salary | ₹33,333 | ₹41,667 | ⬆️ Higher |
| HRA | ₹16,667 | ₹20,833 | ⬆️ Higher |
| Special Allowance | ₹29,930 | ₹18,029 | ⬇️ Lower |
| Employer PF (capped ₹15K) | ₹1,800 | ₹1,800 | ➡️ Same (capped) |
| Gratuity Provision (Employer Cost) | ₹1,603 | ₹2,004 | ⬆️ Higher provision |
| Gross Salary | ₹79,930 | ₹79,529 | ⬇️ Slightly lower |
| Employee PF Deduction | ₹1,800 | ₹1,800 | ➡️ Same (capped) |
| Net Take-Home | ₹77,930 | ₹77,529 | -₹401/month |
✅ Employee PF unchanged — Basic exceeds ₹15,000 in both old and new structure. The ₹1,800 cap applies in both cases. The take-home difference here is entirely due to higher employer gratuity provision absorbing more of the fixed CTC — not a pay deduction.
₹12,00,000 Annual CTC
₹1,00,000/month
Take-Home Change
-₹481/month
| Component | Old (Basic ~40%) | New (Basic 50%) | Change |
|---|---|---|---|
| Basic Salary | ₹40,000 | ₹50,000 | ⬆️ Higher |
| HRA | ₹20,000 | ₹25,000 | ⬆️ Higher |
| Special Allowance | ₹36,074 | ₹21,798 | ⬇️ Lower |
| Employer PF (capped ₹15K) | ₹1,800 | ₹1,800 | ➡️ Same (capped) |
| Gratuity Provision (Employer Cost) | ₹1,924 | ₹2,405 | ⬆️ Higher provision |
| Gross Salary | ₹96,276 | ₹95,795 | ⬇️ Slightly lower |
| Employee PF Deduction | ₹1,800 | ₹1,800 | ➡️ Same (capped) |
| Net Take-Home | ₹94,276 | ₹93,795 | -₹481/month |
✅ Employee PF unchanged — Basic exceeds ₹15,000 in both old and new structure. The ₹1,800 cap applies in both cases. The take-home difference here is entirely due to higher employer gratuity provision absorbing more of the fixed CTC — not a pay deduction.
₹15,00,000 Annual CTC
₹1,25,000/month
Take-Home Change
-₹601/month
| Component | Old (Basic ~40%) | New (Basic 50%) | Change |
|---|---|---|---|
| Basic Salary | ₹50,000 | ₹62,500 | ⬆️ Higher |
| HRA | ₹25,000 | ₹31,250 | ⬆️ Higher |
| Special Allowance | ₹45,795 | ₹27,244 | ⬇️ Lower |
| Employer PF (capped ₹15K) | ₹1,800 | ₹1,800 | ➡️ Same (capped) |
| Gratuity Provision (Employer Cost) | ₹2,405 | ₹3,006 | ⬆️ Higher provision |
| Gross Salary | ₹1,20,795 | ₹1,20,194 | ⬇️ Slightly lower |
| Employee PF Deduction | ₹1,800 | ₹1,800 | ➡️ Same (capped) |
| Net Take-Home | ₹1,18,795 | ₹1,18,194 | -₹601/month |
✅ Employee PF unchanged — Basic exceeds ₹15,000 in both old and new structure. The ₹1,800 cap applies in both cases. The take-home difference here is entirely due to higher employer gratuity provision absorbing more of the fixed CTC — not a pay deduction.
Quick Summary — Net Take-Home Change Under New Labour Code
| Annual CTC | Old Net/month | New Net/month | Monthly Diff | PF Impact | Reason for Change |
|---|---|---|---|---|---|
| ₹3,00,000 | ₹22,919 | ₹22,199 | -₹720 | ⬆️ Increases | PF rises + higher gratuity provision |
| ₹3,60,000 | ₹26,343 | ₹25,478 | -₹865 | ⬆️ Increases | PF rises + higher gratuity provision |
| ₹6,00,000 | ₹45,238 | ₹44,998 | -₹240 | ➡️ Same (capped) | Higher employer gratuity provision only |
| ₹8,40,000 | ₹63,853 | ₹63,516 | -₹337 | ➡️ Same (capped) | Higher employer gratuity provision only |
| ₹10,00,000 | ₹77,930 | ₹77,529 | -₹401 | ➡️ Same (capped) | Higher employer gratuity provision only |
| ₹12,00,000 | ₹94,276 | ₹93,795 | -₹481 | ➡️ Same (capped) | Higher employer gratuity provision only |
| ₹15,00,000 | ₹1,18,795 | ₹1,18,194 | -₹601 | ➡️ Same (capped) | Higher employer gratuity provision only |
💡 Key Insight: Gratuity is never deducted from your monthly pay slip. The take-home reduction occurs only when total CTC is fixed — the employer allocates more of it toward gratuity provision (an employer obligation), leaving less as gross salary. PF stays ₹1,800/month for all CTC ≥ ₹3.6 LPA.
✅ The Silver Lining — New Labour Code Benefits You Too
✓ More HRA Tax Exemption
Higher Basic means higher HRA. For metro employees paying rent, the increased HRA exemption under Section 10(13A) can fully offset any take-home reduction.
✓ Larger Gratuity Payout
Gratuity = (Basic × 15 ÷ 26) × years of service. A higher Basic significantly increases the lump sum you receive after 5 years. This is an employer-funded benefit — not a cost to you.
✓ Lower Taxable Special Allowance
Special Allowance drops as Basic rises. Since Special Allowance is fully taxable, a smaller amount may reduce your income tax liability depending on your slab.
✓ Stronger Social Security Base
A higher Basic strengthens EPS (pension) and ESIC calculations for lower-income employees, improving social security coverage over time.
Calculate your CTC under New Labour Code
Enter CTC → get updated breakup with 50% Basic, correct PF cap, and employer gratuity provision. Free tool.
Frequently Asked Questions
How does new Labour Code 2025 affect CTC calculation in India?▼
Basic salary must now be ≥ 50% of wages. Employee PF stays capped at ₹1,800/month (12% of ₹15,000 ceiling). The employer gratuity provision rises since it is 4.81% of a now-higher Basic — but this is an employer cost, not a salary deduction. If the employer keeps total CTC fixed, gross salary reduces slightly, which lowers take-home by ₹200–₹600/month. No money is lost.
Does PF increase under new Labour Code 2025?▼
For most employees NO. Employee PF is capped at 12% of ₹15,000 basic = ₹1,800/month maximum. PF only increases for CTC below ₹3,60,000/year where Basic was previously below ₹15,000 and the new 50% rule pushes it above. For CTC ≥ ₹3.6 LPA, employee PF stays exactly ₹1,800/month.
Is gratuity deducted from my salary under the new Labour Code?▼
No. Gratuity is an employer-funded obligation — it is never deducted from your monthly pay slip. The employer sets aside approximately 4.81% of your Basic salary each month as a future gratuity liability. If your employer keeps total CTC fixed while increasing this provision (due to higher Basic), the gross salary component of CTC shrinks slightly — which reduces take-home. But you receive the accumulated gratuity as a lump sum after 5 years.
What is the 50% wage rule in new Labour Code India?▼
Under Code on Wages 2019 (effective November 21, 2025), Basic + DA must be ≥ 50% of total wages. This prevents companies keeping Basic artificially low to reduce PF and gratuity obligations. All salary structures must now comply.
Is new Labour Code applicable to all companies in India?▼
Yes. The four Labour Codes are central legislation. State governments must also notify rules for the codes to apply in their state. Most major states including Delhi, Maharashtra, Karnataka, and Tamil Nadu have notified the rules.