Spending too much on recruitment, payroll or global HR?
We help you find the Best Providers at the lowest cost.
Minimum wage in India is a widely discussed topic, as it directly affects the livelihood of millions of workers across the country. India offers one of the most competitive labor costs in Asia, with the national-level minimum wage currently set at around INR 178 (USD 2.16) per day, amounting to INR 5,340 (USD 65) per month. It is important, however, to recognize that this is the floor level wage, and wage rates can vary depending on factors such as geographical location, skill level, and industry.
India’s labor laws are going through their biggest change in decades. Global businesses and investors must now understand the minimum wage through the Code on Wages 2019, not just the old Minimum Wages Act of 1948.
The new law merges older regulations, sets national standards, and redefines what counts as “wages.”
These changes affect payroll, compliance, and the cost of running operations. This 2026 guide breaks down the new system to help businesses plan with clarity.
The Code on Wages, 2019, responds to years of complaints from industries and investors who found the country’s overlapping and outdated labor rules a barrier to growth and foreign investment.
For decades, India’s labor laws were scattered across more than 40 central laws and over 100 state-level statutes. Many were inconsistent and outdated. To fix this, the government consolidated 29 central laws into four streamlined labor codes that cover all key areas of employment:
The Code on Wages was the first to pass. It replaces four major wage-related laws:
As of July 2025, 32 out of 36 states and union territories have released their draft rules. States like West Bengal are still pending. Employers must respect old laws while preparing for the new Code. Tracking state-level changes is now an important part of compliance.
For example, if an employee earns (Rupees) ₹100,000 a month. The salary is structured as ₹30,000 basic pay and ₹70,000 allowances. Since allowances are 70% of pay, well above the 50% limit, ₹20,000 of that allowance must be added back to the statutory wage. The new provident fund base becomes ₹50,000 instead of ₹30,000, increasing the employer’s contribution liability by 67%.
The Code now applies to all employees in both organized and unorganized sectors. It removes earlier wage ceilings and restrictions. High-earning employees, including managers, now fall under rules on minimum wages and timely wage payments.
Employers must provide equal wages and opportunities for men and women doing the same or similar work. The law defines similar work as requiring the same skill, effort, responsibility, and experience.
The national floor wage aims to reduce economic disparities across states and create a common standard of living for workers nationwide. In the past, the Central Government announced a National Floor Level Minimum Wage (NFLMW) as an advisory guideline.
States often ignored it, and some set their minimum wages below this benchmark. The last revision came in 2019, when the NFLMW was fixed at ₹178 per day.
The Code on Wages changes this. Section 9 empowers the Central Government to set a statutory floor wage that is legally binding across the country.
The new system creates a structured two-tier process:
The national floor wage sets a baseline, but the actual minimum wage is decided at the state level. India does not have a single national rate because of its economic diversity.
State governments consider multiple factors when setting wage rates. This leads to thousands of different rates across India. Key factors include:
The table below highlights monthly minimum wages for unskilled, skilled, and highly skilled workers in key states and union territories for 2025. Rates include basic wages plus VDA and reflect the most urbanized zone.
| State / UT | Unskilled (₹/Month) | Skilled (₹/Month) | Highly Skilled (₹/Month) | Effective Date |
|---|---|---|---|---|
| Andaman & Nicobar Islands | 16,666 | 24,128 | 21,970 | Jan 1, 2025 |
| Andhra Pradesh (Zone I) | 12,410 | 13,230 | 16,248 | Apr 1, 2025 |
| Arunachal Pradesh | 9,100 | 11,700 | – | Apr 1, 2025 |
| Assam | 10,344 | 15,032 | 19,326 | Dec 1, 2024 |
| Bihar | 11,024 | 13,936 | 17,004 | Apr 1, 2025 |
| Chandigarh | 14,394 | 15,069 (Skilled-I) | 15,469 | Apr 1, 2025 |
| Chhattisgarh (Zone A) | 11,176 | 12,866 | 13,158 | Apr 1, 2025 |
| Delhi | 18,456 | 22,411 | – | Apr 1, 2025 |
| Goa (Zone A) | 14,274 | 17,290 (Clerical) | – | Apr 1, 2025 |
| Gujarat (Zone I) | 12,935 | 13,507 | – | Apr 1, 2025 |
| Haryana | 11,257 | 13,683 (Skilled B) | 14,367 | Jan 1, 2025 |
| Himachal Pradesh | 12,750 | 14,790 | 15,390 | Apr 1, 2025 |
| Jammu & Kashmir | 8,086 | 12,558 | 14,352 | Oct 17, 2022 |
| Jharkhand (Area A) | 12,168 | 16,822 | 19,396 | Apr 1, 2025 |
| Karnataka (Zone 1) | 23,276 | 28,285 | 31,114 | Apr 1, 2025 |
| Kerala | 13,810 (Grade E) | – | – | Apr 2025 |
| Ladakh | 13,500 | 17,250 | 25,050 | Nov 2, 2022 |
| Madhya Pradesh | 12,125 | 14,844 | 16,469 | Apr 1, 2025 |
| Maharashtra (Zone I) | 13,635 | 15,246 | – | Jul 1, 2025 |
| Manipur | 12,000 | 14,400 | – | Mar 12, 2025 |
| Meghalaya | 13,650 | 15,730 | 16,770 | Jan 1, 2025 |
| Mizoram | 420 (per day) | 730 (Skilled-I) | – | Apr 1, 2023 |
| Nagaland | 5,280 | 7,050 | – | Jun 14, 2019 |
| Odisha | 12,012 | 14,612 | 15,912 | Apr 1, 2025 |
| Punjab | 11,390 | 13,067 | 14,099 | Mar 1, 2025 |
| Rajasthan | 7,410 | 8,034 | 9,334 | Jan 1, 2023 |
| Sikkim | 15,000 | 16,050 | 16,950 | Jul 11, 2022 |
| Tamil Nadu (Zone A) | 11,131 | 11,283 | 11,695 | Apr 1, 2025 |
| Telangana (Zone I) | 12,750 | 13,772 | 14,607 | Apr 1, 2025 |
| Tripura | 7,939 | 9,740 | – | Apr 1, 2025 |
| Uttar Pradesh | 10,994 | 13,547 | – | Apr 1, 2025 |
| Uttarakhand | 12,539 | 14,023 | – | Apr 1, 2024 |
| West Bengal (Zone A) | 10,329 | 12,499 | 13,748 | Jul 1, 2025 |
The National Capital Territory of Delhi, along with states like Karnataka, reports some of the highest minimum wages, reflecting their status as major economic states with a higher cost of living.
In contrast, states with larger rural populations and less industrialization, such as Nagaland and Rajasthan, have historically had lower wage floors.
India’s new wage policies bring both opportunities and risks. Economists and policymakers continue to debate their long-term effects on growth, employment, and social welfare.
The Code on Wages 2019 simplifies wage laws but creates stricter rules for businesses. Companies now face heavier penalties, longer claim periods, and the possibility of employees taking legal action to defend their rights. HR and finance teams should use the Code’s requirements to guide their internal audits.
The checklist below highlights actionable steps:
| Compliance Area | Key Provision |
|---|---|
| Wage Structure | New definition of “wages” with a 50% cap on allowances. |
| Minimum Wage Adherence | Must pay at least the state minimum wage, which must be above the national floor. |
| Wage Payment | Monthly wages must be paid on time (by the 7th of the following month). Terminated employees must be paid within two working days. |
| Overtime | Overtime must be paid at twice the normal wage rate. |
| Bonus Disbursement | Annual bonus between 8.33% and 20% must be paid to eligible employees. |
| Permissible Deductions | Deductions allowed only on specified grounds. Cannot exceed 50% of wages. |
| Record Keeping | Employers must maintain prescribed registers of employees and wages. |
| Payslips | Payslips must be given in written or electronic form. |
| Gender Pay Equity | Employers cannot discriminate in wages or hiring based on gender for the same or similar work. |
The Code renames inspectors as “Inspector-cum-Facilitators”, giving them two roles: enforcing compliance and advising employers. Another major change is the shift to a web-based, randomized inspection system to reduce arbitrary checks and increase transparency. However, enforcement is still challenging in India’s informal sector, where over 90% of workers are outside formal employment.
Fines for paying less than the minimum wage are up to 100 times higher than before. Repeat offenders may face imprisonment, with directors and managers held personally responsible.
Employees can now file claims for underpayment or non-payment of wages up to three years later, compared to six months to two years under older laws.
India’s adoption of the Code on Wages is a turning point in labor law. The reforms create a fairer, simpler system that protects workers while giving businesses a clearer framework to work with.
Tracking wage revisions across 28 states, restructuring pay to meet the 50% allowance rule, and maintaining compliance for a distributed workforce is no small task for employers. Mistakes are costly, and the margin for error is shrinking.
An India Employer of Record (EOR) can remove these challenges entirely. By acting as the legal employer of your staff in India, an EOR ensures that payroll, benefits, and statutory contributions are always accurate and compliant with the latest rules. This allows you to concentrate on business growth while experts handle the complexities of Indian labor law.
Yes. The Code on Wages, 2019, is designed for universal coverage. Rules on minimum wage, timely payment, and overtime apply to almost every employee, regardless of their contract type.
You must pay the minimum wage of the state where the employee is based and performs their work, not the state where your company is registered.
For a first-time offense, you could face a fine. If you commit the same offense again within five years, the penalties can escalate to imprisonment for up to three months, a larger fine, or both.
