As payroll regulations evolve, organizations face new challenges and opportunities...
Global Partner. Integrated Solutions.
Updates from Across the Globe | March 2026
As payroll regulations evolve, organizations face new challenges and opportunities to streamline processes and enhance compliance. This edition spotlights both India's and the UK's major reforms, from digital PF transfers to enhanced identity checks for company directors. It also highlights the latest practices, penalties, and technological advancements driving statutory compliance. These insights support both business continuity and workforce management.
In the spotlight
Key highlights on New Income Tax
India's Income Tax Act, 2025, will replace the 1961 Act effective 1 April 2026, overhauling the direct tax framework. The new law adopts simpler language and reduces the number of sections from 819 to 536, while introducing structured formulae and tables for various computations, along with several other changes.
For payroll and business leaders, the main payroll impacts are administrative. Salary-related provisions are now consolidated. Compliance structures are more organized. Digital, rule-based processes are being used to enhance efficiency, reduce ambiguity, and lower litigation risks. Notably, tax slabs and core tax policies remain unchanged. This ensures payroll tax calculations remain continuous while improving compliance through a more streamlined, technology-enabled framework.
Draft Rule 15 of the Income-tax Rules, 2026, introduces a new method for valuing employee perquisites. The rule simplifies provisions and updates limits. Tax rates on employer-provided cars and chauffeur services rise. Tax-free limits increase for meal vouchers, gifts, children's education, and medical treatment loans. Some benefits become more tax-efficient for employees.
The draft also proposes new rules that affect payroll calculations, including population-linked valuation for rent-free accommodation and clearer salary definitions. These adjustments may directly affect the computation of taxable salary, the valuation of non-cash benefits, and the payroll system updates required for compliance. Organizations should closely monitor the final notification to ensure systems are updated and communicate these payroll changes to employees.
EPFO Approves Interest Rate on Provident Fund Deposits for FY 2025-26
The Employees' Provident Fund Organization has approved an 8.25% interest rate on EPF deposits for FY 2025-26, matching last year's rate. This follows the Central Board of Trustees' recommendation. Interest on EPF balances is calculated monthly and credited to member accounts yearly after notification.
The continued rate above 8% reflects EPFO's investment performance across government securities, debt instruments, and ETFs. This supports stable growth in employees' retirement savings. For payroll and employers, the announcement does not require operational changes. EPFO manages interest computation and crediting. It does, however, provide employees with clarity on expected returns on their provident fund balances for FY 2025-26.
Bahrain's mandatory enhanced wage protection system (WPS) - Key changes for employers effective February 2026
Bahrain implemented a mandatory Enhanced Wage Protection System (WPS) effective February 2026, introduced by the Labor Market Regulatory Authority to strengthen wage transparency, ensure timely salary payments, and protect employees. Under the upgraded system, all private sector employers must process salaries exclusively through the LMRA WPS portal, submit a standardized monthly salary file, and appoint a Wages Responsible Person (WRP) to manage payroll submissions with authorized maker-checker access.
Thailand social security contribution changes for 2026
Thailand implemented changes to its social security contribution framework effective 1 January 2026. The monthly wage ceiling used to calculate contributions under the Thailand Social Security Fund will increase. The ceiling will rise from THB 15,000 to THB 17,500 for 2026-2028. This means the maximum monthly contribution for both employers and employees (at 5%) goes from THB 750 to THB 875. Further phased increases are planned in later years.
Social Security Agreement (SSA) between India and the UK - End of double payments for employees on temporary overseas assignments
On 10 February 2026, India and the United Kingdom signed an India-UK Social Security Agreement. It aims to eliminate double social security contributions for employees on temporary overseas assignments. Under the agreement, employees on assignments of up to 36 months can continue contributing only to their home country's social security system. This is supported by a Certificate of Coverage (CoC) issued through the Employees' Provident Fund Organization.
Socialization of Pension Wage Limit Regulations for the Year 2026 - Indonesia
Indonesia's BPJS Ketenagakerjaan has announced an increase in the Pension Security wage ceiling for 2026. This is aligned with national GDP growth. Effective March 2026, the contribution wage limit will rise from IDR 10,547,400 to about IDR 11,086,300. This will increase the salary base used to calculate pension contributions. Employers and employees may see slightly higher monthly pension contributions. Employees will benefit from improved long-term retirement adequacy. Employers' key action is to update payroll systems and ensure contributions are calculated using the revised ceiling. Local offices should communicate and monitor compliance with the updated rules.
Understanding Payrolling Benefits in Kind (BIK) in the UK
HM Revenue & Customs has introduced payrolling of Benefits in Kind (BIK) to simplify the taxation of employee benefits in the United Kingdom. Under this system, taxable benefits such as company cars or private medical insurance will be taxed in real time through payroll. These benefits will no longer be reported annually on the P11D form. Employers can voluntarily adopt payrolling from April 2026. It becomes mandatory from April 2027.
Companies in India are set to give an average salary hike of 9.1% in 2026. Global Capability Centers lead at around 10.4%.
Emerging tech roles such as AI, ML, cybersecurity, and cloud can command salary premiums of up to 40% in India's evolving pay structures.
Around 80% of APAC organizations are rethinking their payroll strategy. Drivers include talent shortages, compliance complexity, and digital transformation.
Payroll technology investments are accelerating. Over 65% of companies plan to increase spending on payroll automation and AI-enabled systems.
Past Insights
New Era for India's Workforce: New Labour Codes Implemented
The unified Labour Codes replace multiple registrations/licenses/returns with single PAN-India systems, formalize all employment categories through appointment letters, extend ESIC coverage to hazardous single-worker sites, introduce National Floor Wage oversight, equalize fixed-term employee benefits with permanents, enable women workforce participation across night/hazardous operations, and establish comprehensive preventive healthcare and safety infrastructure requirements.
Singapore Rate Changes
Singapore CPF changes take effect on 1 January 2026. The Ordinary Wage ceiling increases to SGD 8,000 per month, with contribution rates rising to 34% for ages 55-60 (employer 16%, employee 18%) and 25% for ages 60-65 (employer 12.5%, employee 12.5%), credited to the Retirement Account up to the Full Retirement Sum. The annual salary ceiling of SGD 102,000 remains unchanged. Employers must update payroll systems, assess cost impacts, communicate net pay adjustments, and ensure compliance by 1 January 2026.
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