Will the new labour code reduce my take-home salary?
By Vijay Singh Sinhmar · Fintech automation specialist, 8 years in finance · Published 2026-10-06
Only if your basic pay was below half your package and your employer pays provident fund on full wages. The Code counts at least half your pay as wages for PF, so on a ₹10 lakh CTC with basic at 30%, in-hand falls from ₹77,133 to ₹73,133 a month in FY 2026-27. The ₹4,000 goes into your provident fund.
Educational information, not investment advice · Muktify is not SEBI-registered
In-Hand Salary Calculator (FY 2026-27)
CTC to monthly take-home — after EPF, income tax (new regime) and professional tax.
Basic is under half your pay, so PF is worked out on ₹5.00L a year, not on basic — the Code on Social Security counts allowances above half of pay as wages.
Employer's PF included in CTC?
PF worked out on
Payslip shows a flat ₹3,000 of PF? Your employer caps it at the ₹25,000 wage ceiling.
₹200 in most states; 0 in Delhi, UP and a few others
Monthly in-hand
₹73,133
₹8.78L per year · 88% of your CTC reaches your account
Where the rest goes (per year)
Your EPF isn't lost — ₹1.20L/yr (yours + employer's) builds your retirement corpus.
Assumptions
- New tax regime, FY 2026-27 (₹75,000 standard deduction, 87A rebate). Using old-regime deductions? Compare with the Tax Regime Calculator.
- EPF at 12% for you and your employer — of PF wages (basic, or half your total pay if basic is less, under the Code on Social Security's wages rule), or of PF wages capped at the ₹25,000-a-month statutory wage ceiling (in force from 17 September 2026) if you choose that above.
- Not modelled: gratuity accrual, ESI, NPS, variable pay, perks, surcharge above ₹50L.
Educational estimate on your inputs — actual take-home depends on your employer's salary structure.
Not tax or investment advice. Not SEBI-registered.
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See how long your money would last →What the 50% rule changes
The four labour codes have been in force since 21 November 2025. Under them, “wages” means basic pay, dearness allowance and retaining allowance, and the other allowances may not be more than half of your total pay. Where they are, the excess is counted back into wages.
Provident fund is 12% of wages, from you and 12% from your employer, and gratuity is worked out on wages too. So a package built with a low basic and large allowances now has a larger wage figure for PF than its basic. Your CTC does not change; what changes is how much of it reaches your account each month and how much goes to your provident fund.
The ₹10 lakh example
A ₹10,00,000 CTC with basic at 30%, the employer’s provident fund inside the CTC and ₹200 a month of professional tax, on the new regime. Before the Code, PF was 12% of the ₹3,00,000 basic. Under the Code, PF wages are half the package, ₹5,00,000, so your own PF rises from ₹36,000 to ₹60,000 a year and the employer’s rises by the same amount.
Both contributions come out of the same CTC, so in-hand falls by ₹4,000 a month, from ₹77,133 to ₹73,133. No income tax applies at this package either way.
| Line | PF on basic only | PF under the Code |
|---|---|---|
| PF wages a year | ₹3,00,000 | ₹5,00,000 |
| Your provident fund a year | ₹36,000 | ₹60,000 |
| In hand a month | ₹77,133 | ₹73,133 |
Package by package
The same calculation at other packages, every one with basic at 30%. The fall in in-hand grows with the package, because the extra provident fund is a share of it.
At ₹15 lakh and ₹20 lakh the fall is a little smaller than the extra PF, because the employer’s larger contribution lowers gross salary and with it the income tax: at ₹15 lakh the year’s tax goes from ₹89,076 to ₹83,460.
| CTC | PF on basic only | PF under the Code | Fall a month |
|---|---|---|---|
| ₹6,00,000 | ₹46,200 | ₹43,800 | ₹2,400 |
| ₹8,00,000 | ₹61,667 | ₹58,467 | ₹3,200 |
| ₹10,00,000 | ₹77,133 | ₹73,133 | ₹4,000 |
| ₹12,00,000 | ₹92,600 | ₹87,800 | ₹4,800 |
| ₹15,00,000 | ₹1,08,377 | ₹1,02,845 | ₹5,532 |
| ₹20,00,000 | ₹1,39,681 | ₹1,32,513 | ₹7,168 |
When it changes nothing
If your basic was already half the package or more, your PF wages were already at least half and nothing moves. On a ₹10 lakh CTC, basic at 30%, 40% or 50% now gives the same ₹73,133 in hand, because the Code holds PF wages at half the package in all three. Above half, PF follows the basic itself: at 60% basic the in-hand is ₹71,133.
If your employer pays provident fund only on the statutory wage ceiling of ₹25,000 a month, PF is ₹3,000 a month from each side whatever the wage figure, and in-hand on the same ₹10 lakh package stays at ₹77,133. Whether PF is paid on the ceiling or on full wages is set by your employer’s payroll.
Where the ₹4,000 goes
None of it is lost. Both halves of the provident fund are paid into your own PF account, so on the ₹10 lakh example ₹48,000 a year more is saved there than before: ₹24,000 from your side and ₹24,000 from the employer’s. Gratuity, paid after five years of service, is also worked out on wages, so a higher wage figure raises it too.
What changes is timing: less cash each month now, more in your provident fund for later. The calculator below shows your own package under the Code; set the basic share and whether PF is paid on the wage ceiling to match your payslip.
Frequently asked questions
Is the new labour code a pay cut?
No. Your CTC stays the same. Where basic was below half the package, more of the CTC goes to provident fund, so monthly in-hand falls and PF savings rise by the same total. On a ₹10 lakh CTC with 30% basic, in-hand falls ₹4,000 a month.
From when does the 50% wage rule apply?
The four labour codes came into force on 21 November 2025, and many employers restructured salaries from April 2026, the start of FY 2026-27.
My basic is 40% of CTC. Will my in-hand fall?
It already counts half the package as PF wages under the Code, so it is the same as at 30% or 50% basic. Compared with PF on a 40% basic before the Code, PF is higher and in-hand lower, unless your employer pays PF on the ₹25,000 wage ceiling.
Can my employer pay PF only on ₹25,000?
Yes. The 12% is required on wages up to the statutory ceiling of ₹25,000 a month; contributions above it are allowed but not required. On a ₹10 lakh package with PF on the ceiling, in-hand is ₹77,133 a month.
Does the labour code change my income tax?
Not the rules. Where the employer’s PF is inside your CTC, a larger employer contribution lowers your gross salary slightly, and the tax on it with it: at ₹15 lakh with 30% basic, from ₹89,076 to ₹83,460 a year.
Related
- Salary in-hand calculator →
- How much PF is deducted from my salary? →
- What is the in-hand salary for a ₹10 LPA package? →
- CTC vs gross vs in-hand salary — what is the difference? →
- How is gratuity calculated in India? →
Last updated 2026-10-06. Figures reflect FY 2026-27 and are educational estimates, not advice. Muktify is not SEBI-registered and never recommends or ranks any instrument.
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