New Labour Code: ₹500 Creche Allowance

New central government labour code rules, effective May 2026, require certain employers to pay a minimum ₹500 per month per child (up to two children under age 6) as a creche allowance if the workplace does not have a creche facility. The allowance is taxable income.

Here's what happened: Employers covered under new central labour codes must pay at least ₹500/month per child as creche allowance if no in-house creche facility exists at the workplace.. The benefit applies to employees with children under six years of age, for a maximum of two children — giving eligible parents up to ₹1,000/month total.. These rules came into force from May 8, 2026, and apply to specific categories of establishments as defined under the applicable labour codes..

What you should do: Check with your HR or payroll department whether your company is covered under the new central labour codes and whether you qualify for this allowance.. If you have one or two children under six and your employer has no creche, submit a formal written request for the ₹500/month creche allowance citing the new rules.. Factor the allowance into your tax planning — it is fully taxable, so add it to your gross income when estimating your advance tax or TDS for the year..

Pro tip: Even if your company starts offering a creche facility later in the year, you are entitled to the cash allowance for every month the facility was unavailable — keep a record of dates to claim the full amount.