Take-home pay
What the worker actually receives
Gross wages minus the worker's own PF, ESI, professional tax and TDS.
Learn — India
Employee & labour cost in India
What a worker really costs an Indian employer, beyond the wage on the offer letter: the statutory components, the ceilings that decide who they apply to, the difference between CTC and true cost, and how construction crews differ from payroll staff.
Every statutory figure below carries its official source and effective date. Last verified 2026-08-09.
Four numbers people call "salary"
Most confusion about Indian labour cost comes from four different figures sharing one word. They rise in this order, and only the last one is what your business actually spends.
Gross wages
What appears on the payslip
Basic, DA and allowances, before any employee deduction.
CTC
What the offer letter says
Gross plus the employer's PF and gratuity provision. This is a compensation framing, not a complete cost.
True employer cost
What finance actually spends
CTC plus employer ESI, statutory bonus, PF administration charges, and site costs such as PPE, transport or accommodation.
The statutory components
These rates are set centrally and apply across India. What varies iswho they apply to — each has a ceiling or an eligibility test that decides whether it appears in your cost at all.
Provident Fund (EPF, EPS, EDLI)
The employer contributes 12% of PF wages. Of that, 8.33% is diverted to the Employees' Pension Scheme on wages up to the ₹15,000 ceiling, and the remainder goes to EPF. On top sit EDLI life cover at 0.5% and administration charges at 0.5% (minimum ₹75 a month), so the employer's real PF outflow is roughly 13% of PF wages.
Watch out: The matching 12% employee contribution is a deduction from the worker's wages — it is not an employer cost, and adding it to your budget overstates the cost of the hire.
Official source · effective 2014-09-01
Employees' State Insurance (ESI)
For covered employees the employer pays 3.25% of wages and the employee 0.75%. Ordinary coverage applies where monthly wages are up to ₹21,000. Coverage is tested on ordinary wages excluding overtime; once an employee is covered, contributions are payable on wages including overtime.
Watch out: ESI is a material cost for helpers, operators and junior staff and a non-event above the ceiling. Because coverage also depends on establishment facts, the calculator lets you override the automatic test rather than guessing for you.
Official source · effective 2019-07-01
Gratuity
Gratuity is fifteen days' wages for every completed year of service, computed for monthly-rated employees as monthly wages ÷ 26 × 15. Expressed monthly that is about 4.81% of wages. It is paid as a lump sum when the worker leaves, not remitted monthly.
Watch out: Treat it as a provision you reserve each month. The liability accrues from day one even though it usually vests at five years — and at one year for fixed-term employees under the labour codes.
Official source · effective 2025-11-21
Statutory bonus
Employees earning up to ₹21,000 a month who worked at least 30 days in the year are entitled to an annual bonus of 8.33% to 20%. It is calculated on wages capped at ₹7,000 a month, or the applicable minimum wage if that is higher.
Watch out: Two different ceilings are at work — one decides who qualifies, the other decides the amount. Applying 8.33% to a full salary, or to a worker above the eligibility ceiling, is the most common bonus error in cost models.
Official source · effective 2025-11-21
Overtime
Work beyond eight hours a day or forty-eight hours a week attracts overtime at not less than 2× the normal wage rate under the labour codes in force since 21 November 2025.
Watch out: On construction and manufacturing sites overtime is often the difference between a profitable quote and a loss, because it also increases the ESI wage base for covered workers.
Official source · effective 2025-11-21
Paid leave and non-productive time
Eligible workers earn one day of leave for every 20 days worked under the OSH framework. Paid leave, holidays and downtime are hours you fund without site output.
Watch out: This is why cost per paid day and cost per productive day differ. The calculator keeps leave optional rather than inventing an accrual you did not budget.
Official source · effective 2025-11-21
The 50% wage-definition rule
Under the Code on Wages, wages means basic pay, dearness allowance and retaining allowance. Allowances such as HRA, conveyance, overtime allowance and commission are excluded — but only up to a point. If those excluded components exceed 50% of all remuneration, the excess is added back into wages for statutory purposes.
The Ministry's worked example
- Total remuneration ₹76,000/month, of which basic + DA is ₹20,000
- Allowances ₹40,000, plus gratuity and retrenchment components ₹16,000
- Allowances counted for the test: ₹56,000, against a 50% limit of ₹38,000
- Excess of ₹2,000 is added back — statutory calculations run on ₹22,000
The practical consequence: structuring a very low basic to shrink PF, gratuity and bonus liabilities no longer works. If your wage structure leans heavily on allowances, your statutory base is probably higher than your payslip's basic figure suggests — use the calculator's PF on actual wages mode to model that.
Code on Wages, 2019 — Section 2(y) · in force since 2025-11-21
Minimum wages: why there is no single Indian number
"What is the minimum wage in India?" has no one answer, and that trips up more labour budgets than any statutory rate does. The wage floor that applies to your worker depends on four things at once:
Who notifies it — state or centre
Most employment is in the state sphere: each state and UT notifies its own rates. A defined list of industries — railways, mines, oilfields, major ports and similar — sits in the central sphere and follows rates notified by the Centre instead. The two are different numbers for the same job title.
Skill category
Rates are published per category — unskilled, semi-skilled, skilled and highly skilled. A helper and a mason on the same site fall under different floors, which is why a single blended rate across a crew misstates the total.
Zone within the state
Larger states split into zones, with metropolitan areas carrying a higher floor than districts. The same skill category can differ meaningfully between Zone I and Zone III of one state.
The revision cycle
Minimum wages are usually a basic rate plus a variable dearness allowance that is revised periodically as the cost-of-living index moves. A rate you noted last year is very likely stale — and paying below the current notified rate is an offence, not a negotiation.
Why this calculator asks for your wage instead of guessing it
Encoding every state's schedule would mean publishing hundreds of numbers that go stale on their own revision cycles, and a wrong wage floor is worse than no wage floor. The state and skill selectors are therefore labelled reference-only: you enter the wage you actually pay, and the calculator handles the statutory costs on top, whichare set centrally and do not vary by state.
To confirm the floor that applies to you, check the current notification from your state labour department, or theChief Labour Commissioner (Central) for central-sphere employment. Verify before it goes into payroll — indicative rate tables published by third parties, including the ranges contractors quote each other, are market observations, not the notified minimum.
Employer cost is not the same as payroll deductions
This is the single most common modelling error, and it inflates budgets by double digits. Money deducted from a worker's wages is already inside the gross wage you are paying. Counting it again as employer cost counts the same rupee twice.
Employer cost
- Employer PF (12%), EDLI and administration charges
- Employer ESI (3.25%) for covered workers
- Gratuity accrual
- Statutory bonus provision
- PPE, transport, accommodation, insurance, tools
Employee deductions — not your cost
- Employee PF (12%)
- Employee ESI (0.75%)
- Professional tax, where the state levies it
- TDS / income tax
The calculator shows deductions in their own panel with an estimated take-home, so you can answer the worker's question and your own from one screen without mixing them.
Daily-wage workers and why burden varies
A daily wage is not a small monthly salary — the ceilings behave differently, so two workers on the same site can carry very different burden percentages.
Helper
₹600 per day
- Monthly wage
- ₹15,600
- Employer cost / month
- ₹19,390
- True cost / day
- ₹745.77/day
- Labour burden
- 24.3%
Below both ceilings: ESI applies and the statutory bonus is payable, so the burden is at its highest.
Supervisor
₹35,000 per month
- Monthly wage
- ₹35,000
- Employer cost / month
- ₹41,133
- True cost / day
- ₹1,582.03/day
- Labour burden
- 17.5%
Above the ESI and bonus ceilings, with PF on actual wages: fewer statutory items, but each is larger in rupees.
Both figures are computed live by the same engine the calculator uses — open either scenario in the calculator to change the assumptions.
Construction crews, migrant workers and BOCW cess
Construction is where Indian labour costing diverges most from payroll costing. Crews are priced per trade and per day, workers may be recruited from other states, and the project carries an obligation that has nothing to do with wages.
Cost the crew, not just the worker
A job is a set of trade rows — four masons for 45 days, eight helpers for 45 days, two electricians for 12 days. Each row's daily wage decides its own PF, ESI and bonus treatment, so a single blended percentage across the crew will misstate the total.Project mode prices each row through the per-worker engine and totals the job.
BOCW cess is a project cost, not a payroll cost
The Building and Other Construction Workers welfare cess is 1.0% of the cost of construction, including materials, for covered works. On a ₹50,00,000 project that is ₹50,000 — a number that has no relationship to your wage bill. Reporting it as a wage percentage distorts both figures, which is why the calculator keeps it in its own project-level line.
Inter-state migrant workers
Where the OSH thresholds apply to establishments engaging inter-state migrant workers, employers carry additional obligations, including an annual journey allowance for travel to and from the worker's native place. Enter it under advanced costs as a monthly equivalent so it lands in the loaded rate rather than surprising you at year end.
Ministry of Labour & Employment — labour codes · BOCW cess notified at 1.0%
Glossary
- CTC (Cost to Company)
- The annual figure quoted in an offer letter. It usually bundles employer PF and the gratuity provision, and usually omits employer ESI, statutory bonus, PF administration charges and site costs.
- PF wages
- The wage base for provident fund: basic pay plus dearness allowance, subject to the statutory ceiling in the standard mode.
- EPS
- Employees' Pension Scheme. 8.33% of the employer's 12% is diverted here, on wages up to the statutory ceiling.
- EDLI
- Employees' Deposit Linked Insurance — employer-funded life cover, charged on PF wages up to the ceiling.
- Gratuity accrual
- The monthly provision (about 4.81% of wages) an employer reserves against a gratuity liability that is paid as a lump sum at exit.
- Loaded cost
- The wage plus every employer statutory cost, provision and site cost — what a worker really costs per day.
- Labour burden
- Additional employer cost expressed as a percentage of wages. A worker on a ₹600 daily wage can carry a very different burden from one on ₹35,000 a month, because the ceilings bite differently.
- BOCW cess
- A construction welfare cess of 1% of the cost of construction. A project obligation, not a payroll percentage.
- Inter-state migrant worker
- A worker recruited from another state. Where the OSH thresholds apply, employers owe additional obligations including an annual journey allowance.
Every calculator field, explained
- Daily Wage
- Cash wage agreed per working day, before employer statutory costs and before employee deductions.
- Monthly Wage
- Fixed monthly cash wage, before employer statutory costs and before employee deductions.
- Hourly Wage
- Cash wage per hour worked, before employer statutory costs and employee deductions.
- Working Days Per Month
- Days actually worked and paid in a typical month. Indian site work commonly uses 26.
- Hours Per Day
- Normal working hours per day. Work beyond eight hours a day generally attracts overtime at twice the normal rate.
- Workers
- Number of workers with this profile. Crew totals multiply the per-worker cost by this count.
- Overtime Hours Per Month
- Overtime hours in a typical month. The statutory floor is twice the normal wage rate for overtime.
- Overtime Multiplier
- Overtime pay multiplier. The labour codes require at least 2x the normal rate where overtime provisions apply.
- Pf Mode
- Employer Provident Fund contribution: 12% of PF wages plus about 1% EDLI and administration charges. 'Standard ceiling' caps PF wages at ₹15,000/month; 'Actual wages' contributes on the full wage; 'Not applicable' switches PF off. The matching 12% employee share is a deduction, not an employer cost.
- Esi Mode
- Employee State Insurance: employer 3.25% and employee 0.75% of wages for covered employees (ordinary coverage up to ₹21,000/month). 'Automatic' applies the wage ceiling test; override it if your establishment is not covered.
- Include Gratuity
- Gratuity accrues at 15 days' wages per completed year of service (about 4.81% of wages monthly). It is a provision you should reserve, not a monthly government payment.
- Bonus Mode
- Statutory bonus for eligible employees ranges from a minimum of 8.33% to a maximum of 20%, calculated on a capped wage basis. Not every worker is eligible - choose what applies.
- Bonus Custom Rate
- Bonus percentage between the statutory minimum (8.33%) and maximum (20%).
- Bonus Calculation Ceiling Monthly
- Bonus is calculated as if monthly wages were capped at this amount (₹7,000 or the applicable minimum wage, whichever is higher).
- Paid Leave Days Per Year
- Paid leave days per year you fund for this worker. Eligible workers generally earn one day of leave per twenty days worked.
- Ppe Monthly
- Monthly cost per worker for PPE and safety equipment.
- Transport Monthly
- Monthly transport cost per worker, if the employer provides it.
- Accommodation Monthly
- Monthly accommodation cost per worker, if the employer provides it.
- Food Monthly
- Monthly food or meal cost per worker, if the employer provides it.
- Insurance Monthly
- Monthly insurance cost per worker beyond statutory ESI (for example group accident cover).
- Other Monthly
- Any other monthly employer cost per worker (tools, uniforms, recruitment, migrant-worker travel allowance annualised into a monthly figure, and similar).
- In State
- Reference label only in this version. Minimum wages and some obligations vary by state and skill level; this selection does not change the calculation.
- In Skill
- Reference label only. Minimum wage schedules classify workers as unskilled, semi-skilled, skilled, or highly skilled; the selection does not change the calculation.
Frequently asked questions
What is labour burden in the Indian context?
Labour burden is everything an employer pays for a worker beyond the agreed wage — employer PF with its EDLI and administration charges, employer ESI where the worker is covered, the gratuity accrual, the statutory bonus provision, and site costs like PPE, transport or accommodation. Indian employers usually describe it as employee cost, manpower cost or total employer cost rather than 'labour burden'.
Why is my true employer cost higher than the CTC I offered?
CTC conventionally bundles the employer's PF contribution and the gratuity provision, so a well-built offer letter already absorbs two of the big statutory items. What it usually leaves out is employer ESI for lower-paid staff, the statutory bonus, PF administration and EDLI charges, and every site cost from safety equipment to accommodation. Those omissions are what separate CTC from what finance actually spends.
Should employee PF and ESI be counted in my labour cost?
No. The employee's 12% PF and 0.75% ESI are deducted from the worker's own wages — they reduce take-home pay rather than increasing what you spend. Counting them as employer cost double-counts money already inside the gross wage. The same applies to professional tax and TDS.
How does the 50% wage-definition rule affect statutory costs?
Under the Code on Wages, wages means basic pay, dearness allowance and retaining allowance. If the excluded allowances exceed 50% of all remuneration, the excess is added back into wages for statutory purposes. In the Ministry's own worked example, a worker on ₹76,000 total remuneration with ₹20,000 basic and DA has ₹2,000 added back, so statutory calculations run on ₹22,000. The practical effect is that structuring a very low basic to shrink PF, gratuity and bonus no longer works.
Do labour costs vary by state in India?
Yes. Minimum wages are notified by state and by skill category (unskilled, semi-skilled, skilled, highly skilled), and professional tax and labour welfare fund rules differ by state as well. The central statutory rates used here — PF, ESI, gratuity, bonus, overtime — apply nationally, so this calculator applies those and asks you to enter the wage you actually pay.
What is the minimum wage for construction workers in India?
There is no single national figure. Minimum wages are notified per state and union territory, split by skill category and often by zone within the state, and revised periodically as the dearness allowance component moves. Certain industries such as railways, mines and major ports fall in the central sphere and follow separately notified rates. Check your state labour department's current notification, or the Chief Labour Commissioner (Central) for central-sphere work, before putting a rate into payroll.
Can I pay the market rate instead of the notified minimum wage?
You can pay more than the notified minimum, never less — paying below it is an offence, not a commercial negotiation. Market rates that contractors quote each other often sit above the notified floor in metros and on commercial projects, so the wage you actually agree is usually the higher of the two. That agreed wage is what belongs in this calculator; the statutory costs are then added on top of it.
How do I estimate labour cost for a construction project?
List the trades, then for each one multiply workers by daily wage by days on site, and add the employer's statutory costs to every worker's day rate rather than to the crew total — a mason and a helper cross the PF, ESI and bonus ceilings at different points, so a single blended percentage misstates the job. Project mode does this per trade row and totals it, and reports BOCW cess separately because that is charged on construction cost, not on wages.
How do I cost a construction crew rather than one worker?
Use project mode. It prices each trade row (workers × daily wage × days) through the same per-worker engine, so a mason and a helper each carry their own correct statutory treatment, and it totals the job. BOCW cess is shown separately because it is charged on the cost of construction, not on wages.
Is BOCW cess a payroll cost?
No. The Building and Other Construction Workers welfare cess is 1% of the total cost of construction, including materials, for covered works. Treating it as a percentage of wages both overstates the wage burden and understates the project obligation, which is why it belongs in a separate project-level line.
Does this calculator handle income tax or GST?
Deliberately not. TDS is the worker's income tax withheld from their pay, not an employer labour cost. GST becomes relevant when you buy contracted or subcontracted services, which is a different economic relationship from employing a worker. Keeping both out is what makes the employer-cost number honest.
Put your own numbers through it
Every assumption in this guide is editable in the calculator.