Salary Slip Under New Labour Code India 2026
What Changes on Your Payslip — Explained
The new Labour Code (effective November 21, 2025) restructures your salary slip. Basic rises to 50%, Special Allowance shrinks, PF rises with Basic up to the ₹25,000 ceiling. See the exact before vs after payslip for a ₹6 LPA CTC — then generate yours free.
📋
FormatSame Format — New Values
The salary slip structure (Earnings + Deductions table) does not change. Only the component values change due to the 50% Basic rule.
⬆️
What Goes UpBasic & HRA Rise
Basic salary moves from ~40% to 50% of CTC. HRA (50% of Basic) rises proportionally. These appear larger on your payslip.
⬇️
What Goes DownSpecial Allowance Drops
Special Allowance is the balance component. As Basic and HRA grow, Special Allowance shrinks significantly — reducing your taxable income.
📌 Gratuity Does NOT Appear as a Deduction on Your Salary Slip
Gratuity is an employer-funded obligation — it is provisioned by the company at 4.81% of Basic per month and is never deducted from your pay. It appears in your CTC letter as an employer cost, but your monthly salary slip will never show gratuity as a deduction. If it does, your employer has made an error.
📋 About These Examples
The salary slips below are illustrative examples for a ₹6,00,000 annual CTC. Actual values depend on your employer's salary structure and city. Assumptions used:
- •Basic is set at 50% of monthly CTC in the new structure (minimum under Code on Wages).
- •HRA is 50% of Basic — metro city rate (Delhi, Mumbai, Bangalore, etc.).
- •Employee PF is 12% of Basic, capped at a ₹25,000 basic basis = ₹3,000/month maximum.
- •Gratuity is an employer provision at 4.81% of Basic — NOT shown as a deduction on payslip.
- •Total CTC held constant at ₹6,00,000/year — higher gratuity provision reduces gross salary.
- •Professional Tax ₹200/month. Medical ₹1,250 and Conveyance ₹1,600 fixed.
Before vs After — ₹6,00,000 Annual CTC Salary Slip
Organisation
ABC Technologies Pvt. Ltd.
CTC: ₹6,00,000 / year | March 2026
PAYSLIP
Employee
Rahul Sharma
ID
EMP-001
Designation
Sr. Executive
PAN
ABCDE1234F
| Earnings | Deductions | ||
|---|---|---|---|
| Basic Salary(40% of CTC) | ₹ 20,000 | Employee PF (12%)(12% of Basic) | ₹ 2,400 |
| House Rent Allowance(50% of Basic) | ₹ 10,000 | ESIC(N/A) | — |
| Medical Allowance(Fixed) | ₹ 1,250 | Professional Tax(State levy) | ₹ 200 |
| Conveyance Allowance(Fixed) | ₹ 1,600 | ||
| Special Allowance(Balance — taxable) | ₹ 13,788 | ||
| Gross Earnings | ₹ 46,638 | Total Deductions | ₹ 2,600 |
Net Take-Home Pay
₹ 44,038
Organisation
ABC Technologies Pvt. Ltd.
CTC: ₹6,00,000 / year | March 2026
PAYSLIP
Employee
Rahul Sharma
ID
EMP-001
Designation
Sr. Executive
PAN
ABCDE1234F
| Earnings | Deductions | ||
|---|---|---|---|
| Basic Salary(50% of CTC ✅) | ₹ 25,000 | Employee PF (12%)(Capped ₹25K ✅) | ₹ 3,000 |
| House Rent Allowance(50% of Basic) | ₹ 12,500 | ESIC(N/A) | — |
| Medical Allowance(Fixed) | ₹ 1,250 | Professional Tax(State levy) | ₹ 200 |
| Conveyance Allowance(Fixed) | ₹ 1,600 | ||
| Special Allowance(Balance — lower) | ₹ 5,448 | ||
| Gross Earnings | ₹ 45,798 | Total Deductions | ₹ 3,200 |
Net Take-Home Pay
₹ 42,598
Every Salary Slip Field — Before vs After New Labour Code
| Field on Payslip | Old Value | New Value | Change | Why |
|---|---|---|---|---|
| Basic Salary | ₹20,000 (40% of CTC) | ₹25,000 (50% of CTC) | ⬆️ +₹5,000 | Mandated by Code on Wages — Basic ≥ 50% of wages |
| House Rent Allowance | ₹10,000 | ₹12,500 | ⬆️ +₹2,500 | HRA is 50% of Basic — rises proportionally |
| Special Allowance | ₹13,788 | ₹5,448 | ⬇️ −₹8,340 | Balance component — shrinks as Basic and HRA grow |
| Medical Allowance | ₹1,250 | ₹1,250 | ➡️ No change | Fixed component — unaffected by Labour Code |
| Conveyance Allowance | ₹1,600 | ₹1,600 | ➡️ No change | Fixed component — unaffected by Labour Code |
| Employee PF Deduction | ₹2,400 | ₹3,000 | ⬆️ +₹600 | PF is 12% of Basic, capped at a ₹25,000 basis. Basic rises from ₹20,000 to ₹25,000. |
| Professional Tax | ₹200 | ₹200 | ➡️ No change | State-level levy — unaffected by Labour Code |
| Gratuity on Payslip | Not shown | Not shown | ➡️ Still not shown | Gratuity is an employer provision — never a deduction on salary slip |
| Gross Salary | ₹46,638 | ₹45,798 | ⬇️ −₹840 | CTC held fixed — more goes to employer PF and gratuity provision |
| Net Take-Home | ₹44,038 | ₹42,598 | ⬇️ −₹1,440 | Higher employer PF and gratuity provision, plus higher employee PF |
💡 The salary slip format (Earnings + Deductions structure) stays the same. Only the numbers change. Employers must revise salary structures and issue updated payslips to comply.
What Employers Must Do — Payroll Compliance Checklist
Restructure CTC Letters
RequiredUpdate all employee CTC letters to show Basic ≥ 50% of total wages. Issue revised CTC breakup documents to all employees.
Update Payroll Software
RequiredEnsure your payroll system calculates Basic at 50% of CTC, adjusts HRA proportionally, and reduces Special Allowance as balance.
Verify PF Calculation
VerifyConfirm employee PF is calculated on actual Basic (capped at a ₹25,000 basis). Do NOT inflate PF beyond ₹3,000/month unless the employee opts for higher voluntary PF.
Remove Gratuity from Deductions
ImportantEnsure gratuity does not appear as a deduction on the salary slip. It is an employer provision — show it only in the CTC letter, never on the monthly payslip.
Issue Updated Salary Slips
RequiredGenerate and issue updated salary slips reflecting the new structure from the month of compliance. Keep records for audits.
Generate a compliant salary slip instantly
Updated for new Labour Code — 50% Basic rule applied automatically. Free, no login.
Frequently Asked Questions
What changes on a salary slip under the new Labour Code 2025?▼
Basic Salary increases to ≥ 50% of total wages. HRA rises proportionally (50% of new higher Basic). Special Allowance decreases as it is the balance component. Employee PF rises with Basic, capped at a maximum of ₹3,000/month (12% of the ₹25,000 ceiling). Gratuity does not appear on payslip at all — it is an employer provision.
Does PF change on my salary slip under new Labour Code?▼
Employee PF changes with your Basic. At ₹6 LPA CTC it rises from ₹2,400 (Basic ₹20,000) to ₹3,000 (Basic ₹25,000). PF is 12% of Basic, capped at the ₹25,000 wage ceiling — so ₹3,000/month is the maximum. For CTC at or above ₹6 LPA, Basic already exceeds ₹25,000, so PF stays at ₹3,000 regardless of the new code.
Should gratuity appear on my salary slip as a deduction?▼
No. Gratuity should never appear as a deduction on your salary slip. It is an employer-funded obligation — provisioned at 4.81% of Basic per month by the employer. It only appears in your CTC letter as an employer cost. If your payslip shows gratuity deducted from your pay, that is incorrect and should be raised with HR.
Does the salary slip format change under new Labour Code?▼
The structure does not change — Earnings table and Deductions table remain the same. However, values change: Basic increases, HRA increases, Special Allowance decreases significantly. Employers must revise salary structures and issue updated payslips to comply with the 50% wage rule effective November 21, 2025.
When must employers issue updated salary slips?▼
Employers must issue revised salary slips from the month they implement the new wage structure under the Labour Code. Since the four Labour Codes became effective November 21, 2025, companies should have updated salary structures and payslips from that date or their next payroll cycle.