Two points here - conveyance -1600 and medical . Exemptions for these two compoments were replaced with a standard deduction. Most of the companies have removed these two companies as part of the salary structure as there is no tax benefit. If these two components still be part of your comp structure, ensure they are taxed
From India, Bangalore
umakanthan53
5120

Labour law & HR consultant
Dear HBJ,
The monthly gross salary payable which comprises of basic, HRA and Spl Allowance is Rs.37425-00. The only inclusive component is basic which is short of the 50% of the gross. Therefore, that amount should be taken out from the spl.allowance and added to the basic as wages for all the purposes of calculation under the Code.

From India, Salem
HBJ
Manufacturing
Thank you for the replies.
Mr.Venkatraman, yes, these allowances are given as wages and are taxed. We have just retained old nomenclature.
Mr.Umakanthan, thanks for your inputs. We shall modify the salary structure accordingly.

From India, Aurangabad
Dear HBJ,
Based on data you have provided, it appears that Total cash payable to the employee is 512,450.00 per year and Employer's PF contribution is 20,808.00 per year. Therefore, total cash is 533258.00. 50% of the same is 266629.00 should be the wage ( Basic +DA ) per year i.e. per month it will be 22,219.00 and may be rounded off to 22300.00 per month. Rest amount will be monthly and yearly components other than Basic &DA as per wage code.
Thanks & regards,
S K Bandyopadhyay ( Howrah, WB)
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity

From India, New Delhi
HBJ
Manufacturing
Dear Mr.Bandyopadhyay, According to Mr.Umakanthan the basic needs to be 50% of the monthly salary of 37,425 and this would come to about Rs.18,800 per month. However you have also included annual allowances / bonus and PF and the monthly basic comes to 22,300 per year. This is a huge difference.
Can anyone please confirm which is the correct calculation as per the new Code of Wages. Are annual allowances / incentives / PF also to be considered as wages? In which case we would have a huge burden of gratuity difference also.

From India, Aurangabad
Dear HBJ,

The confusion is about the quantum of Wage ( Basic & DA ) - 50% of monthly gross or 50% of Total remuneration payable to any employee including Employer's PF contribution, Bonus etc.

For argument shake let us consider Wage will 50% of monthly gross. Now in the exclusion list there are Employer's PF contribution, Statutory Bonus etc. etc.

In the proviso it has been mentioned that "if the payments made by the employer to the employee under sub clauses (a) to (i) exceeds 50% of ALL THE REMUNERATION calculated under the clause , the amount which excess such 50% shall be deemed as remuneration and shall be accordingly added in wages under this clause. " Employer's portion of PF, Statutory Bonus etc.etc. falls under sub clause (a) to (i).

Therefore in your existing issue if we add back Employer's portion of PF, Bonus etc. etc. to the other side ( other than Basic & DA) , the Basic and DA will not be 50% of the monthly gross - not fulfill the definition of Wage as per wage code.

Therefore, to my opinion Basic & DA should be 50% of ALL THE REMUNERATION CALCULATED UNDER THE CLAUSE.

You may cross check with Tax Guru ( ITAX ), Mercer, Deloitte etc.etc. for the interpretation of wage as per wage code.

Thanks & Regards,

S K Bandyopadhyay ( WB, Howrah)

+91 98310 81531

USD HR Solutions – To Strive towards excellence with effort and integrity

From India, New Delhi
umakanthan53
5120

Labour law & HR consultant
Dear HBJ,
So far as I am given to understand "wages" or "salary" is the monetary compensation or that which can be computed in terms of money payable regularly in a certain periodicity as agreed in the contract of employment. Section 16 of the Code on Wages,2019 also stipulates that no wage period shall exceed a month in any case. As such it is distinctly different from " remuneration" or "income" for other statutory purposes like taxation, calculation of certain fringe benefits etc.
Thus the periodicity in which wages/salary could be payable to a paid employee or wage period is only a month at the maximum under any contract of employment. If we analyze the excluded components enumerated under sub-clauses (a) to (i) of section 2(y) of the Code in this back drop, they are in the nature of additional financial pay outs statutorily imposed on the employer proportionately based on the included components for the purpose of computation of bonus, contribution to EPF and terminal benefits mentioned under sub- clauses (j) and (k). This premise of wages or salary to be computed per month only is also fortified by the definition of "wage worker" occurring under clause 2(90) of the Code on Social Security,2020.
I suppose that under this context only you have mentioned the monthly gross salary in the example as Rs.37425-00 with the componential structure of Basic, Special Allowance, HRA and Conveyance Allowance and raised the query.
Of course, I do admit that in its attempt to simplify the definition of the term wages as uniformly applicable to all the four Labor Codes, the Code on Wages,2019 has actually given room for interpretational tussle or hassle. I think that's how our learned fried Mr.Bandyopathyay has interpreted the term in a way more or less analogous to C.T.C- well, perceptions can differ!

From India, Salem
HBJ
Manufacturing
Thank you sirs for your learned advice and interpretation. I think at the moment I will consider the definition of wages as monthly payment and adjust the payment heads accordingly. With bonus and yearly incentives considered the gratuity contribution increases beyond a reasonable amount and does not seem justified in any way.
I appreciate the time taken by everyone to reply. Thank you once again.

From India, Aurangabad
Monthly Gross 37,425/-and 50% of that is Basic & DA = 18,713/- . Therefore, other allowances are 18713/-. Now in the exclusion list (a) & (c) -Statutory Bonus and Employer's portion of PF will be considered with other allowances and let say those amounts are 1000/- per month statutory Bonus @8.33% ( based on minimum wages 12,000/- ) and PF contribution let say on 15,000/- Basic & DA is 1800/- per month.
Therefore the other allowances will be 18713 + 1000 +1800 = 21513/- more than Basic and DA( 18,713/-) - not fulfilling 50 : 50 condition of wage vs other allowances as per definition of wage under codes. This is mathematics - no magic.
What will be fate of my interpretation only future can say but the above calculation can not be changed until Wage definition is changed.
S K Bandyopadhyay ( WB, Howrah)
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity

From India, New Delhi
[email protected]
Sr. Manager HR
Hi Everyone
Related to the topic of New-Wage Code 2019 implementation, I have got a few questions
a. With 50% being set up as the Basic for EPF compliance, Is ₹ 15000/- limit still relevant?
b. What about the EPF contribution for those employees who were having higher basic and the Employee as well as the employer was making EPF contribution on the higher basic.
These points need to be clarified.

From India, Pune

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