7th Pay Commission Latest News Today: Union Finance Minister Nirmala Sitharaman made it clear that the Central government is going to implement New Wage Code Bill 2021 from April 1, 2021. And if the Centre implements the New Wage Code Bill 2021, it will have a direct impact on the central government employees’ salary, provident fund and gratuity. Moreover, the private sector employees’ salary will also be impacted. According to a report by Zee News, as per the Wage Code Bill 2021, an employee’s monthly basic salary can’t be less than 50 per cent of the net CTC.Also Read - 7th Pay Commission: Central Govt Employees Likely to Get 4% Hike in Dearness Allowance in July
In other words, the Central government’s New Wage Code Bill 2021 will not allow employees’ allowances such as Dearness Allowance (DA), House Rent Allowance (HRA), Travel Allowance (TA), etc. to be more than 50 per cent of net CTC. Moreover, tax and investment experts say that a central government employee’s basic salary has direct impact on PF and Gratuity while allowance like DA, TA, HRA plays a major role in one’s salary. So, a central government and private sector employees’ PF, Gratuity, DA, TA, HRA will get changed if the New Wage Code 2021 is implemented from April 1, 2021. Also Read - EPFO: Know Benefits, Process Of Completing e-Nomination Process For PF Account Here
Impact on PF, gratuity: As one employee’s monthly PF contribution and Gratuity is a part of his/her monthly basic salary, if the New Wage Code Bill 2021 is implemented, it will lead to change in one’s monthly PF and Gratuity contribution. However, it is yet to be seen whether the wage code will be implemented from April 1, 2021 or not as the government is yet to make any official announcement regarding the implementation of the new wage code and when it will be implemented. Also Read - Salary, Provident Fund, Office Working Hours: Here’s What Likely to Change Under New Labour Laws From July 1
Speaking to Zee News, Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, “Once the New Wage Code gets implemented, one’s monthly PF and Gratuity will get changed too as the monthly PF and Gratuity contribution is calculated on monthly basic plus DA. Since, both DA and basic salary will change, one’s PF and Gratuity contribution is bound to change after the New Wage Act 2021 implementation.”
As the Centre is still in the process of finalising the wage code, it is, however, not clear whether the monthly salary of government or private employees (having EPF account) will go up or down due to new monthly contribution of the PF, EPF and Gratuity, but it’s for sure that one’s PF, EPF and Gratuity contribution will change.