Two big changes are reshaping salaries in India. The four labour codes came into force on 21 November 2025, and the Income-tax Act, 2025 replaced the 1961 Act on 1 April 2026. Here is what they mean for you as a job seeker or employee.
General information as of 15 November 2026, not legal or tax advice. Check the details with your employer's HR team or a qualified adviser.
Four labour codes replace 29 old laws
On 21 November 2025 the Government of India brought four labour codes into force: the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020. Together they replace 29 central labour laws.
Some details depend on rules made by the central and state governments, and states publish their own rules, so the exact position can differ from state to state. If your employer changes your salary structure, ask HR which rules they are following.
Wages must be at least half of your pay
The Code on Wages uses one definition of "wages" for PF, gratuity, bonus and other benefits. Wages mainly means basic pay and dearness allowance. If the allowances that are left out of wages add up to more than half of your total pay, the extra is counted back into wages.
What this can mean for you:
- Employers that kept basic pay low may raise it, so that it makes up at least half of your pay.
- Your PF contribution and your future gratuity can go up, because both are worked out on wages.
- Your monthly in-hand pay can fall a little if your CTC stays the same, because more of it goes into PF.
When you compare job offers, ask for the full CTC breakup and check that basic pay plus DA is at least half of it. Our CTC to in-hand salary calculator shows roughly what reaches your bank account each month.
Fixed-term employees get gratuity after one year
Fixed-term employees, hired for a set period, must now get the same pay, working hours and benefits as permanent staff doing similar work. They become eligible for gratuity, on a pro-rata basis, after one year of continuous service. Permanent employees who resign still generally need five years of continuous service for gratuity.
Every worker gets an appointment letter
Employers must now give every worker a written appointment letter, including contract and fixed-term staff. Keep it safe: it is your proof of the job, the pay and the terms you agreed. If an offer comes without one, ask for it before you join.
Final wages within two working days of leaving
Section 17(2) of the Code on Wages says that when an employee resigns, or is removed, dismissed or retrenched, the wages due must be paid within two working days. The old two-day rule covered only jobs ended by the employer; the new one also covers resignation. The deadline is for wages; gratuity and some other payments have their own time limits. Our guide to notice periods and resigning covers the rest of the exit process.
A new Income-tax Act from 1 April 2026
The Income-tax Act, 2025 came into force on 1 April 2026 and replaced the Income-tax Act, 1961. It uses a single "tax year" in place of the old "previous year" and "assessment year". Income you earned up to 31 March 2026 is still taxed under the 1961 Act; income from 1 April 2026 falls under the new Act.
Tax slabs unchanged: no tax up to ₹12 lakh
Budget 2026, presented on 1 February 2026, left personal income tax slabs and rates unchanged. Under the new tax regime, the rebate means no income tax on taxable income up to ₹12 lakh. With the ₹75,000 standard deduction for salaried employees, that is about ₹12.75 lakh of salary. Our income tax calculator compares the old and new regimes for your salary.
What to check when you get an offer
- Ask for the full CTC breakup: basic, DA, HRA, other allowances, employer PF and any variable pay.
- Check that basic pay plus DA is at least half of the total. If it is not, ask how the employer will apply the labour codes.
- Work out your in-hand pay, not just the CTC, before you compare offers.
- Ask for your appointment letter before you join, and read the notice period and any bond or recovery clauses.
- If the job is fixed-term, note that you can qualify for gratuity after one year.
Sources
- Press Information Bureau: the Government brings the four labour codes into force (21 November 2025)
- Ministry of Labour and Employment: the same release, with the before-and-after table
- Code on Wages, 2019, section 17: time limit for payment of wages
- WTW: India's long-awaited labour codes in effect (the wages definition and gratuity)
- Business Today: Income-tax Act, 2025 to come into force from 1 April, says the Finance Minister (1 February 2026)
- CIOL: Budget 2026 keeps slabs unchanged; zero tax up to ₹12 lakh, about ₹12.75 lakh for salaried employees (1 February 2026)
- Drishti IAS, from PIB: Income-tax Act, 2025 comes into force (2 April 2026)
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