Payroll Compliance
50% Wage Rule
A provision under the Indian Code on Wages 2026 which mandates that an employee's "wages" (basic pay and certain allowances) must constitute at least 50% of their total Cost to Company (CTC).
Key Takeaways
- Aims to standardize the definition of wages across all labor laws.
- Reduces the practice of bloating CTC with non-wage allowances.
- Impacts PF, Gratuity, and Bonus contributions (increases them).
- Requires a restructuring of traditional Indian salary components.
Ameena Abdurahiman
Subject Matter Expert (HR & Compliance)
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