Personal Finance News
Salary calculation: How much will you take home on ₹5 lakh to ₹20 lakh CTC under new labour codes?
5 min read | Updated on November 27, 2025, 12:24 IST
SUMMARY
New labour codes may reduce take-home pay for some employees. According to the Ministry of Labour and Employment, the provisions of the new labour codes apply to all employers and employees in both the organised and unorganised sectors. It is expected that employers will soon start implementing the new rules
The new labour codes apply to all employers and employees. | Image source: Shutterstock
Till now, many employers have been offering 30% to 40% of an employee's total cost-to-company (CTC) as basic salary. This is set to change with the implementation of the four new labour codes, effective from November 21, 2025.
Under the new labour codes, an employee's basic salary must be at least 50% of the CTC. This means many employers will need to reset their salary packages to ensure 50% of CTC is offered as basic salary.
Let's understand with some examples.
Before reading further, please note the following:
-
There will be no impact on in-hand salary if the employer is already offering 50% of CTC as basic salary
-
Even in cases where the employer is offering 30% or 40% of CTC as basic pay, there will be no reduction in in-hand pay on account of EPF if the employer is deducting only ₹1800 for provident fund (many companies offer this option).
-
Many companies include gratuity as a part of the CTC and deduct a small amount every month. However, employees do not receive this amount if they switch jobs or resign before completing five years of service. Some companies, on the other hand, do not include gratuity in the CTC.
-
Not all employers currently deduct contributions for NPS under either the new or old tax regimes. However, the number of employers offering NPS is increasing every year.
Now, let's see some examples.
First, some assumptions:
-
Employee is under the new tax regime, and CTC structure includes only basic salary (no dearness allowance or retention allowance)
-
The employer deducts 14% of basic pay for NPS
-
24% of basic pay goes towards EPF/EPS
-
The employer currently offers 40% of CTC as basic salary
-
The employer sets aside 4.81% of basic salary as gratuity
In-hand pay when annual CTC is ₹5 lakh: Before and after November 21
| Particulars | Before November 21, 2025 (₹) | From November 21, 2025 (₹) |
|---|---|---|
| CTC | 5,00,000 | 5,00,000 |
| Basic salary | 40% of CTC = 2,00,000 | 50% of CTC = 2,50,000 |
| Reduction for PF (@24% of Basic) | 48,000 | 60,000 |
| Reduction for gratuity (@4.81% of Basic) | 9,620 | 12,025 |
| Reduction for NPS (@14% of Basic) | 28,000 | 35,000 |
| Annual in-hand pay | 4,14,380 | 3,92,975 |
In-hand pay when annual CTC is ₹8 lakh: Before and after November 21
| Particulars | Before November 21, 2025 (₹) | After November 21, 2025 (₹) |
|---|---|---|
| CTC | 8,00,000 | 8,00,000 |
| Basic salary | 40% of CTC = 3,20,000 | 50% of CTC = 4,00,000 |
| Reduction for PF (@24% of Basic) | 76,800 | 96,000 |
| Reduction for gratuity (@4.81% of Basic) | 15,392 | 19,240 |
| Reduction for NPS (@14% of Basic) | 44,800 | 56,000 |
| Annual in-hand pay | 6,63,008 | 6,28,760 |
In-hand pay when annual CTC is ₹15 lakh: Before and after November 21
| Particulars | Before November 21, 2025 (₹) | After November 21, 2025 (₹) |
|---|---|---|
| CTC | 15,00,000 | 15,00,000 |
| Basic salary | 40% of CTC = 6,00,000 | 50% of CTC = 7,50,000 |
| Reduction for PF (@24% of Basic) | 1,44,000 | 1,80,000 |
| Reduction for gratuity (@4.81% of Basic) | 28,860 | 36,075 |
| Reduction for NPS (@14% of Basic) | 84,000 | 1,05,000 |
| Annual in-hand pay | 12,43,140 | 11,78,925 |
In-hand pay when annual CTC is ₹20 lakh: Before and after November 21
| Particulars | Before November 21, 2025 (₹) | After November 21, 2025 (₹) |
|---|---|---|
| CTC | 20,00,000 | 20,00,000 |
| Basic salary | 40% of CTC = 8,00,000 | 50% of CTC = 10,00,000 |
| Reduction for PF (@24% of Basic) | 1,92,000 | 2,40,000 |
| Reduction for gratuity (@4.81% of Basic) | 38,480 | 48,100 |
| Reduction for NPS (@14% of Basic) | 1,12,000 | 1,40,000 |
| Annual in-hand pay | 16,57,520 | 15,71,900 |
The above examples are for illustration purposes only. The actual in-hand pay may vary from case to case basis.
Related News
By signing up you agree to Upstox’s Terms & Conditions
About The Author
Next Story
