Minimum wages in India: how rates are set and what employers actually pay

Minimum wages in India are fixed separately by the central and state governments, not by one national rate. Each state publishes its own rates for each scheduled employment, revises them on its own schedule, and splits the notified figure into a basic rate plus a variable dearness allowance that moves with the cost of living. This guide explains how a rate is set, how a notification is built, and what an employer actually pays once the statutory contributions are added on top. It is the hub for our minimum-wage reference, the minimum wages by state pages and the labour-cost calculator.

Who sets minimum wages, and why there is no national rate

Labour is a concurrent subject under the Constitution, which means both the centre and the states legislate on it. In practice, minimum wages are fixed by state governments for the scheduled employments they have notified, such as security, housekeeping, construction, retail and factory work. There is no single national minimum wage, and there never has been.

A state can set a different rate for the same occupation along several axes at once:

• State and locality. Many states divide themselves into zones, with Zone I (usually the largest city) paying the most.
• Skill level. Unskilled, semi-skilled and skilled workers carry different floors.
• Class of work. Rates can split further by the specific kind of work inside one employment.
• Time or piece rate. A worker paid by the day is treated differently from one paid by output.

Our minimum-wage reference sets out the same structure. Because every one of those variables is local, the same guard role costs differently in Delhi, Bengaluru and Kolkata. That variation is the first thing to plan for when you operate across more than one state.

How a wage notification is built: basic rate plus VDA

A notified minimum wage is not one number. It is normally two:

1. The basic rate, which is the floor for the occupation and skill level.
2. The variable dearness allowance (VDA), which is added on top and revised to track the cost of living.

The VDA is the reason a “fixed” wage still moves. It is adjusted on a fixed schedule, often every six months, using a consumer price index as its trigger, so the total wage does not lose value as prices rise. Employers must pay the notified total, not the basic rate alone. Because VDA-driven adjustments are the main way minimum wages change between formal revisions, the minimum-wage reference explains the mechanism in more detail.

Two rules from the Code on Wages, 2019 sit on top of this structure, and both bind employers now:

• A national floor wage. The central government is to fix a floor wage, and state minimum wages must be equal to or higher than it. It has not been notified yet, so state rates remain the operative floor.
• The 50% rule. Basic wages must be at least 50% of total wages. A structure that keeps basic low and pushes pay into a large “special allowance” looked efficient under the old acts. Under the wage definition in the Code, that allowance counts as wages, so the structure has to be rebuilt. The labour codes guide and the labour-codes reference explain the definition in full.

What employers actually pay: the full build-up

The notified wage is the floor, not the cost. Six statutory components attach to the wages of every eligible worker, and each one is a percentage or a levy on top of the base:

Component	Employer cost	Applies to
Provident fund (PF)	12% of basic plus DA	Capped at the ₹25,000 wage ceiling
ESI (employer share)	3.25% of wages	Monthly wages up to ₹21,000
Statutory bonus	8.33% to 20%	On the capped wage base; paid by 30 November
Gratuity	Accrual of 15 days’ wages per year (about 4.81% a month)	Service-based eligibility
Professional tax	State levy	Capped at ₹2,500 a year where levied
Labour welfare fund	State contribution	Where the state runs the fund

PF and ESI thresholds do not vary. Almost everything else does: professional tax slabs, minimum wage floors, LWF rates and due dates are all set state by state. The statutory compliance calendar maps the filing dates.

The practical effect is that statutory costs add roughly a quarter to a third on top of the base wage before any agency fee. That gap between the headline wage and the all-in cost is where most budget surprises live. The labour-cost calculator applies the exact percentages to your wage and state.

What the numbers look like across states

The table below shows indicative unskilled monthly minimum-wage rates for the highest wage zone of each state, drawn from the latest state notifications. Every state now has its own page with the full rate table, its effective date, the notification and the official source — start at minimum wages by state.

Data effective: the notification dates shown in each row · Source: state labour department notifications · Last verified: October 2026. Minimum wages are revised at different times in different states, and some figures are reported rather than gazette-checked — each state page states its own verification level. Confirm the current notification for your state before budgeting.

State	Effective	Unskilled monthly (urban)	Notes
Andhra Pradesh	Oct 2026	₹14,171 (Zone I)	Security-services schedule; ₹12,871 (shops peon, Zone I)
Assam	Jan 2026	₹10,543	State-wide
Chandigarh	Oct 2025	₹14,562	Union territory
Delhi	Apr 2025	₹18,456	No 2026 revision posted; no wage zones
Gujarat	Oct 2026	₹13,637 (Zone I)	Zone II ₹13,351
Haryana	Apr 2026	₹15,221	Official gazette; single statewide rate
Karnataka	Apr 2026	₹23,376 (Zone I)	Highest in India; Zone II ₹21,251, Zone III ₹19,319; a legal challenge pending
Maharashtra	Jul 2026	₹14,155 (Zone I)	Zone II ₹13,559, Zone III ₹12,962; guard-board rate higher
Punjab	May 2026	₹13,486	Single statewide rate
Rajasthan	Jan 2023	₹7,410	Not revised since 2023
Tamil Nadu	Apr 2026	₹14,120 (Zone A)	Security-guard band; Zone D ₹13,906
Telangana	Jun 2026	₹14,484 (Zone I)	Security-services schedule
Uttar Pradesh	Apr 2026	₹13,690 (Category I)	Interim order; Category II ₹13,006
West Bengal	Jul 2026	₹10,566 (Zone A)	Security-services schedule; Zone B ₹9,758

The revision dates are as revealing as the rates. Some states revise twice a year, others have left rates untouched for years. Rajasthan has not moved since 2023; Karnataka left its rates unchanged for nine years before its 2026 revision. A contract priced on one state’s notification does not travel well to the next.

A worked example: the cost of one Delhi guard

To make the build-up concrete, here is an unskilled Delhi wage carried through the statutory components. The figures are illustrative; the labour-cost calculator runs the same logic on your own wage.

Component	Basis	Monthly figure
Basic wage (Delhi unskilled)	—	₹18,456
Employer PF	₹18,456 × 12%	₹2,215
Employer ESI	₹18,456 × 3.25%	₹600
Statutory bonus	₹7,000 × 8.33%	₹583
Gratuity accrual	₹18,456 × 4.81%	₹888
Professional tax	fixed	₹200
Labour welfare fund	fixed	₹20
Labour cost	—	≈ ₹22,962
Agency service charge (6% to 10%)	—	≈ ₹1,378 to ₹2,296
All-in monthly	—	≈ ₹24,300 to ₹25,300

Two things stand out. The statutory components add roughly a quarter to a third to the base wage before any service charge, and the all-in figure sits far above the headline wage. The cost of a security guard works through the same build-up state by state, and the blue-collar salary structure shows how the components are laid out.

Why the rate moves, and how to absorb it

Minimum wages change in two ways: a formal revision of the basic rate, and the quieter rolling adjustment of the VDA. Because these happen at different times, a long contract can drift out of compliance without anyone changing a single line item.

The practical answer is a revision clause. A compliant manpower contract should state that the rate adjusts automatically when the applicable notification changes, and should say which notification and which effective date apply. Without that clause the risk sits with the buyer: if the wage moves mid-term and the price does not, either the provider absorbs it or the worker is underpaid. Our pricing model shows how the clause fits into the commercial build-up.

Staying compliant: a short checklist

Before you sign a manpower or staffing contract, run these checks:

1. Confirm the current notification for each state, employment and skill level you are deploying, including its effective date. A rate that was correct last quarter may not be.
2. Check the basic rate, not just the all-in wage. If basic sits below 50% of total wages, the statutory base is understated.
3. Ask for an itemised quote. PF, ESI and bonus should appear as separate lines, not folded into a single figure.
4. Require proof of filing. A provider that pays PF and ESI can show the returns and the establishment codes.
5. Write in the revision clause, with the notification and effective date named.
6. Keep the registers. Wage records, attendance and statutory registers are what an inspection asks for.

For the wider diligence picture, see the due-diligence guide and the compliance and licences page.

The cost of paying below the floor

Paying below the notified minimum wage is an offence under the Code on Wages. Penalties include fines and, for repeat offences, imprisonment, with amounts that differ between the Code and state rules. The exposure rarely stops with the provider.

A principal employer can share liability for unpaid compliance costs when a contractor defaults, which is why the compliance and licences page treats wage verification as a buyer risk, not a vendor detail. The PF and ESI for employers guide explains how the contributions are enforced, and where the liability sits when a provider does not pay.

Frequently asked questions

Is there a single minimum wage in India?

No. Labour is a concurrent subject, so the central and state governments both fix minimum wages, and each state publishes its own rates for each scheduled employment. Rates vary by state and locality, skill level, class of work, and whether the worker is paid by time or by output. A national floor wage is provided for under the Code on Wages, 2019, but it has not been notified yet, so state rates remain the operative floor.

How is a minimum wage calculated each month?

Take the notified basic rate for the occupation, skill level and zone, add the applicable variable dearness allowance, and multiply by the number of days worked. Many states quote a daily rate, so a 26-day month is the common monthly basis. The notified total is the floor; the statutory contributions are added on top of it by the employer.

What is VDA and why does the wage keep changing?

VDA is the variable dearness allowance, a component of the notified wage that is revised to track the cost of living, often every six months. It protects the wage from losing value as prices rise. It is the main reason a “fixed” minimum wage still moves between formal revisions, and it is why contracts need a clause that adjusts the rate when the notification changes.

What does an employer actually pay above the minimum wage?

Six statutory components attach to eligible wages: employer PF at 12% of basic plus DA, employer ESI at 3.25%, a statutory bonus of 8.33% to 20%, a gratuity accrual of about 4.81% a month, professional tax where the state levies it, and the labour welfare fund where the state runs one. Together they add roughly a quarter to a third to the base wage before any agency service charge, which typically runs 6% to 10%.

What happens if an employer pays below the minimum wage?

It is an offence. Penalties include fines and, for repeat offences, imprisonment, and the exact amounts differ between the Code and state rules. The buyer is not automatically insulated either: a principal employer can share liability for unpaid compliance costs when a contractor defaults, so wage verification belongs in procurement, not only in the vendor’s back office.

How often do minimum wages change?

It depends on the state. Some revise twice a year, others much less often. Karnataka left its rates unchanged for nine years before its 2026 revision, while Rajasthan has not revised since 2023. The two safest habits are to confirm the current notification before every contract and to include a revision clause that names the notification and its effective date.

The bottom line

There is no national number to look up. Minimum wages are set state by state for each scheduled employment, built from a basic rate plus a moving VDA, and governed now by the Code on Wages and its 50% rule. What you pay is that notified wage plus a statutory load of roughly a quarter to a third, plus the provider’s service charge. Confirm the current notification for every state you operate in, and price the full build-up rather than the headline.

The labour-cost calculator applies the statutory rates to your wage and state, and how pricing works explains the commercial build-up end to end. If you are budgeting across several states or roles, send us the sites and shifts and we will confirm the exact build-up for your contract.