India Introduces Major Payroll Compliance Changes Effective April 2026

India's payroll compliance framework is undergoing significant changes with the implementation of four national Labour Codes since November 2025 and the Income Tax Act 2025 effective April 1, 2026. Key updates include the '50 Basic Salary Rule,' requiring basic pay to be at least half of total CTC, affecting provident fund, gratuity, and other liabilities. Employers must update payroll systems to align with new tax rules, reporting formats, and stricter audit requirements to avoid penalties and ensure compliance.