Under the new Code on Wages, basic pay, Dearness Allowance (DA), and retaining allowance must make up at least 50% of your total cost to company. From 1 April 2026, several important rules related to your salary, retirement savings, job exit, and taxes will change. These reforms will affect almost every salaried person in India. Here’s a clear breakdown of what’s coming and how it will impact you. For many years, companies kept the basic salary portion of your pay quite low — often just 25% to 40% of your total CTC. This helped reduce contributions to Provident Fund (EPF) and gratuity, while keeping your take-home pay higher. Under the new Code on Wages, basic pay, Dearness Allowance (DA), and retaining allowance must make up at least 50% of your total cost to company. Since most private sector jobs don’t have DA or retaining allowance, companies will have to increase the basic salary component significantly. If allowances still cross the 50% mark, the extra amount will be treated as wages for calculating PF and gratuity. This rule applies to every company in India, big or small. Because basic salary is going up, your EPF contribution and gratuity will also increase. As a result, your net income may be lower in the short term; however, your retirement savings will compound at an accelerated rate over time (due to the difference in contribution amounts). Furthermore, you would experience a larger gratuity payout upon leaving the company. For companies, especially in IT, BPO, retail, and hospitality sectors, this will raise their statutory costs by 5-15%. Many firms are currently busy restructuring salary structures to meet the new requirement. You’ll Get Your Final Dues in Just Two Days After Quitting Earlier, when you left a job, it could take 30 to 90 days to get your full and final settlement — pending salary, leave encashment, and other dues. Many people faced serious cash flow problems during job switches. From 1 April, companies must clear all wage-related dues within two working days of your last working day — whether you resigned, were fired, or laid off. If they delay, you can complain to the state Labour Department and even claim interest on the delayed amount.] Note: This two-day rule applies only to salary and related dues. Gratuity still has its own 30-day timeline, and EPF transfer follows the usual EPFO process. India is finally replacing the old Income Tax Act, 1961, with a brand new Income Tax Act, 2025, effective from 1 April 2026.The new law doesn’t change tax rates or most deductions. What it does is make the law much simpler — it reduces the number of sections from 819 to 536 and chapters from 47 to 23. The language is clearer and easier to understand for ordinary taxpayers. Important point: Income earned till 31 March 2026 will still be governed by the old 1961 Act. Only income from 1 April 2026 onwards will fall under the new Act. The confusing difference between “Previous Year” and “Assessment Year” is gone. Now there will be just one term — Tax Year. So income earned between 1 April 2026 and 31 March 2027 will simply be called Tax Year 2026-27. If you’re planning to travel abroad or sending money for education or medical treatment overseas, you’ll benefit from lower Tax Collected at Source (TCS).From 1 April, TCS on overseas tour packages and foreign remittances (under LRS) will be a flat 2%, instead of the earlier 5% or 20%. This will improve cash flow since less money will be blocked upfront. The actual tax liability remains the same — it’s just collected later when you file your return.