One of the most important provisions under the new labour code which became effective last year for most salaried employees and workers is that the wages must account for 50% of the total CTC when calculating provident fund (PF), bonus, gratuity upon retirement or in other specified situations but this does not include gratuity on termination, and other benefits. It’s important to note that this 50% rule excludes certain components like HRA, gratuity payable on termination, retrenchment compensation, and a few others.
Additionally, the proviso to Section 2(y) states that if these exclusions exceed 50% of the total salary paid to an employee, then the amount exceeding 50% shall be deemed to be part of "wages".
