📌 *Higher Tax-Free Salary, Higher Hidden Costs*

➜ New Income-tax rules (effective 1 April 2026) increase tax-free allowances and can improve take-home pay.

➜ But at the same time, changes under the Social Security Code may increase employer costs.

➜ What’s changed
- HRA exemption expanded to more cities (up to 50%)
- Children education allowance: ₹100 → ₹3,000/month
- Hostel allowance: ₹300 → ₹9,000/month
- Potential tax-free benefit: up to ₹2.88 lakh (2 children)

➜ Important catch
- Benefit depends on salary structure + actual expenses
- Not every employee will automatically get this advantage

➜ Where the real issue lies
- Under Social Security Code, 2020, most allowances are treated as “wages”
- Higher “wages” = higher PF, gratuity, leave encashment costs

➜ Practical impact
- If salary shifts from excluded → these allowances → employer cost increases
- If restructuring happens within existing wage components → no cost impact

➜ What this means
- What looks like a tax benefit for employees
- may become a long-term cost for employers

➜ Key Takeaway
- Salary structuring is no longer just tax planning
- It now needs a balance between take-home benefits and cost impact
- Every restructuring decision should be carefully evaluated

🔗 Join *Tax2save* (CA Abhishek Jain) for more: https://chat.whatsapp.com/L4RU3dqS79C2UwYpBC8oh1