Tata Consultancy Services Ltd reported an exceptional charge of ₹2,128 crore in the October-December quarter of FY26 due to the implementation of India’s new labour codes. The company disclosed the impact in an exchange filing, stating that the charge arose from statutory changes linked to employee-related costs.
The labour code-related cost weighed on quarterly earnings, contributing to a 14% year-on-year fall in consolidated net profit to ₹10,657 crore.
The ₹2,128 crore charge accounted for nearly 20% of the reported profit for the quarter, making it a major factor in the overall performance for Q3.
TCS said ₹1,816 crore of the total amount was linked to incremental gratuity costs, while ₹312 crore related to long-term compensated absences.
The company stated that these costs mainly resulted from changes in the definition of wages under the new labour framework. The assessment was carried out based on legal advice and information available at the time of reporting.
India notified 4 consolidated labour codes in November 2025, replacing 29 existing labour laws. The new framework introduces a uniform definition of wages, under which basic pay must account for at least 50% of an employee’s total cost to company.
This change limits the use of allowances and increases statutory payouts such as gratuity and leave-related benefits. Other provisions include rules on timely payment of salaries and overtime compensation.
Apart from labour-related costs, TCS reported ₹1,010 crore as an exceptional item linked to a legal claim by Computer Sciences Corporation in the United States, alleging misappropriation of trade secrets. The company said it is contesting the claim and will pursue legal remedies.
TCS also recorded restructuring costs of ₹253 crore during the quarter, related to workforce adjustments. This was 77% lower than the ₹1,135 crore reported in the previous quarter.
As of the December quarter, the company said more than 217,000 employees had advanced artificial intelligence skills. TCS also increased its intake of fresh graduates with higher-level skills during the period.
Read More: TCS Announces Interim Dividend of ₹11 per Equity Share and Special Dividend of ₹46 per Share!
As of January 13, 2026, 12:00 pm, Tata Consultancy Services (TCS) share price was trading at ₹3,258.20, a 0.57% increase from the previous closing price.
The introduction of the labour codes led to a sizeable one-time cost for TCS in the December quarter. This charge materially affected quarterly profitability and was disclosed as an exceptional item.
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Published on: Jan 13, 2026, 1:29 PM IST
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