Planning to work from home permanently? Your salary might get deducted - Details inside

Ever since the COVID-19 pandemic wreaked havoc in the world in 2020, many companies shifted to the work-from-home model to carry on the job without the risk of transmission. Now, amid the new Omicron threat, many employees are wanting to permanently work from home. It is important to note that if you opt to work from home permanently then you might experience some changes in your salary structure - like House Rent Allowance (HRA) deduction. 

The Labour Ministry is all set to announce the changes in a few days regarding the matter. According to a report in Economic Times, the Labour Ministry might allow employers to make changes to employees' salary structure who want to work from their homes permanently. 

If this does happen, employees might see a decrease in the HRA component and an increase in reimbursement cost. Speaking about the same, a top government official has said that the labour ministry is likely to decide about the same, after looking at all options, soon.

If these changes do take place, the most important impact could be on tax on the HRA. 

As of now, the tax refund for HRA is - the actual HRA received from the employer, 50% of basic salary + DA for those living in metro cities, and 40% for those living in non-metro cities, rent paid minus 10% of basic salary + DA.

In another case, if the HRA is reduced and not replaced with something else for which tax refund is available, then the liability of the employee may increase.