Tata Consultancy Services has clarified that employees have not faced any reduction in gross salary or take-home pay under its revised compensation framework introduced during the FY26 appraisal cycle.
The company’s response comes after employees reportedly raised concerns over changes in salary revision letters, revised cost-to-company (CTC) calculations and adjustments in compensation components. Discussions emerged after some employees noticed that gratuity was no longer reflected within overall CTC figures, while others questioned changes related to variable pay and salary structuring.
TCS said the revised compensation framework was implemented to align with India’s evolving labour regulations and upcoming labour codes. According to the company, the restructuring aims to standardise wage definitions across its India workforce while maintaining employee take-home pay and continuing to provide flexibility for tax planning.
One of the main areas of confusion relates to gratuity calculations. Under the updated structure, gratuity is being aligned with provisions under the Code on Social Security, 2020. The revised method uses a broader wage definition instead of relying primarily on basic salary calculations followed earlier.
Under the revised framework, wage calculations now include components such as basic salary, city allowance and personal allowance. Meanwhile, house rent allowance (HRA), conveyance benefits, provident fund contributions, superannuation benefits and statutory bonuses are treated separately. Variable pay, insurance premiums and performance incentives are also excluded from the wage definition used for gratuity purposes.
TCS stated that comparisons between previous and revised CTC structures should exclude gratuity in order to provide a like-for-like comparison. The company also said gratuity accruals could increase under the revised system because calculations are now based on a broader wage base. Employees are expected to receive whichever gratuity calculation proves more beneficial under either the company’s existing gratuity scheme or future social security provisions.
The clarification comes at a time when compensation structures across the IT industry are evolving alongside labour reforms and changing workplace policies. Performance-linked variable payouts in many organisations are increasingly tied to deployment metrics, productivity benchmarks and workplace attendance requirements.
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