Got a raise? Here’s why your in-hand salary could still fall

For many salaried employees, the appraisal season was anything but routine this year. Some organisations rolled out increments, effective April 1, alongside salary structures aligned with the new labour codes, while others introduced tax-exempt allowances — such as meal coupons, children’s education and hostel expenses — whose limits were raised under the new Income Tax rules. Many companies are yet to announce hikes or restructure salaries, but are already running internal simulations around the labour codes as part of their preparations.
Employees need to be aware that a salary hike this season may not translate into a matching rise in take-home pay. Under the labour codes, employers must consider 50% of total remuneration while calculating social security benefits such as Employees’ Provident Fund (EPF), gratuity and Employees’ State Insurance (ESI). A higher allocation towards these benefits could reduce in-hand salary.