The upcoming labour codes in India will significantly alter salary structures by capping allowances at 50% of total pay. This change will lead to an increase in the basic salary component, thereby raising both employee and employer contributions to the Provident Fund (PF). Shankar Kumar, Founder & CEO of EZ Compliance, notes that while this enhances retirement savings, it simultaneously decreases monthly take-home pay. Under the old tax regime, higher PF contributions can lower taxable income, as contributions fall under Section 80C. However, high-income earners must be cautious of exceeding the ₹7.5 lakh annual cap on employer contributions to PF, National Pension System (NPS), and superannuation, as amounts beyond this threshold become taxable. Hemant Choubey, Founder & CEO of Hireduo, emphasizes that while PF is a valuable Exempt-Exempt-Exempt (EEE) instrument under the old regime, most deductions, including PF benefits, do not apply under the new tax regime. Therefore, employees face a trade-off: increased PF contributions lead to forced savings, which may enhance retirement funds but reduce current liquidity. Individuals must weigh their preference for immediate cash against the benefits of long-term savings.