Will my in-hand salary fall under the labour codes?

If your basic + DA is under half your pay and your CTC stays the same, usually yes: more of the CTC goes into PF and gratuity, so less is paid out each month. The money in PF is still yours. The calculator shows both figures side by side.

When did the labour codes come into force?

On 21 November 2025. The Ministry of Labour says the new definition of wages applies from that date, including for gratuity and ESI.

What is the PF wage ceiling now?

₹25,000 a month from 17 September 2026, up from ₹15,000 (S.O. 5109(E)). On wages above it, EPFO says contributions may generally stop at the ceiling, unless the employee already contributes on more.

Is the employer’s PF part of my CTC?

In most offer letters, yes. EPFO points out that CTC is not a term in the law: the employer’s contribution is its own, and can’t be treated as a deduction from your pay just by calling it part of CTC.

Why doesn’t the calculator work out income tax?

Tax depends on the regime you choose, your declarations and your other income, so one formula would mislead more people than it helps. Enter the TDS on your payslip, and check your tax with your CA.

Is what I type saved or sent anywhere?

No. The figures are worked out in your browser. Nothing is sent, stored or tracked by the calculator.

Can PrimoERP run this for every employee?

Yes. PrimoERP’s payroll keeps each employee’s salary structure and works out PF, ESI and TDS on salary every month, then posts them to the same books as the rest of your business.

Salary Calculator: CTC to In-Hand (Labour Codes)

Salary calculator

CTC a year (₹)

Cost to company: fixed pay plus the employer’s PF, ESI and gratuity.

Basic + DA, % of CTC

Basic pay and dearness allowance together.

HRA, % of basic

House rent allowance. The rest of the CTC is other allowances.

PF

On wages up to the ₹25,000 ceiling, on full wages, or not covered.

Gratuity provision

4.81% of wages a month, a common convention.

Professional tax a month (₹)

Your state sets it. Use the figure on your payslip.

TDS a month (₹)

Income tax on salary. Not worked out here.

Show amounts

Your salary

₹42,966₹45,678 worked out the old way: ₹2,712 less in hand.

The same CTC, before the codes and under them
Item	Before	Labour codes
Pay
Basic + DA	₹15,000	₹15,000
HRA	₹6,000	₹6,000
Other allowances	₹26,478	₹24,896
Gross pay	₹47,478	₹45,896
Wages for PF, ESI and gratuity
PF and gratuity wagesAdded back by the 50% rule: ₹9,412.87	₹15,000	₹24,412.87
ESI wages	₹47,478over ₹21,000	₹24,412.87over ₹21,000
Taken from pay
PF, employee	−₹1,800	−₹2,930
ESI, employee	₹0	₹0
Professional tax	₹0	₹0
TDS	₹0	₹0
In-hand pay	₹45,678	₹42,966
The employer pays
PF, employerEPS ₹2,034 + EPF ₹896	₹1,800	₹2,930
ESI, employer	₹0	₹0
Gratuity provision	₹722	₹1,174
EDLI and admin charges	₹150	₹244
Cost to the employer	₹50,150	₹50,244

An estimate, not tax or legal advice: check your own figures with your CA. Nothing you type leaves this page.

How it’s worked out.

The rules the calculator applies, in order, from the labour codes, the Ministry of Labour’s FAQs, EPFO and ESIC.

The Code on Wages and the Code on Social Security came into force on 21 November 2025 (S.O. 5322(E) and S.O. 5319(E)).
Source: Code on Wages, 2019, commencement note (India Code), checked 17 Oct 2026
Wages include basic pay, dearness allowance and retaining allowance. They leave out bonus, HRA, conveyance, overtime, commission, the employer’s PF and pension contribution, and a few other payments.
Source: Code on Wages, 2019, s.2(y) (India Code), checked 17 Oct 2026
If the left-out payments come to more than half of all remuneration, the amount over half is added back to wages.
Source: Code on Wages, 2019, s.2(y), first proviso (India Code), checked 17 Oct 2026
All allowances other than basic, DA and retaining allowance count towards the half. Performance incentives, ESOPs, variable pay and reimbursements are not wages.
Source: Ministry of Labour, FAQs on Labour Codes, 30 Dec 2025, Q2 and Q3, checked 17 Oct 2026
The employer’s PF and pension contribution and statutory bonus count in all remuneration for the 50% test. Gratuity, ESI and other retirement benefits do not.
Source: Ministry of Labour, Additional FAQs, 16 Mar 2026, Q1(b), checked 17 Oct 2026
The one definition of wages applies across all four codes, and to ESI from 21 November 2025.
Source: Ministry of Labour, FAQs on Labour Codes, 30 Dec 2025, Q6 and Q17, checked 17 Oct 2026
From 17 September 2026, employee and employer each pay 12% of PF wages up to ₹25,000 a month. Of the employer’s 12%, 8.33% goes to the pension scheme (EPS) and 3.67% to EPF.
Source: EPFO, wage ceiling FAQs, Q12 and Q13, checked 17 Oct 2026
Above ₹25,000, contributions may generally be restricted to the ceiling, unless the employee contributes on higher wages.
Source: EPFO, wage ceiling FAQs, Q21, checked 17 Oct 2026
The employer also pays 0.5% for EDLI insurance and 0.5% in EPF admin charges, with admin charges of at least ₹500 a month per establishment.
Source: EPFO, wage ceiling FAQs, Q13, checked 17 Oct 2026
ESI is 0.75% of wages from the employee and 3.25% from the employer.
Source: ESIC, Contribution, checked 17 Oct 2026
ESI covers employees with wages up to ₹21,000 a month (₹25,000 for persons with disability).
Source: ESIC, Coverage, checked 17 Oct 2026
Gratuity is 15 days’ wages a year: for a monthly-rated employee, monthly wages ÷ 26 × 15.
Source: Code on Social Security, 2020, s.53(2) and Explanation 3 (India Code), checked 17 Oct 2026

Where the law is unclear

Keeping the CTC the same. The calculator keeps the CTC fixed, as most offer letters do, so a higher PF and gratuity cost comes out of other allowances. EPFO says CTC is not a statutory concept, and the employer’s contribution can’t be treated as the employee’s deduction just by calling it part of CTC (FAQ Q15). Whether a CTC may be restructured this way is a question for your labour lawyer.
What counts in all remuneration. The Ministry’s first illustration counts gratuity in the total (FAQ 7, December 2025); its later answer leaves gratuity and ESI out and counts the employer’s PF in (March 2026). The calculator follows the later answer.
ESI wages. Before the codes, ESI was on gross pay, HRA included. The Ministry says the codes’ definition applies to ESI from 21 November 2025, but ESIC’s own “Wages” page still describes the old ESI Act. The calculator uses gross pay in the “Before” column and the codes’ wages under them. Check with your ESIC office.
The gratuity provision. 4.81% of wages is an accounting convention (15 ÷ 26 ÷ 12), not a rate in the law. Your actuary may set a different provision.
EDLI and admin charges. Shown as a cost on top of the CTC. Some employers include them in it.
Old rules in the meantime. Until new rules are notified under the codes, the old rules stay in force where they agree with the codes (Ministry FAQ 1). State rules differ, so check yours.

One CTC, two ways.

CTC ₹6,00,000 a year (₹50,000 a month), basic + DA 30% of CTC, HRA 40% of basic, PF on wages up to ₹25,000, gratuity provision in the CTC.

Basic + DA: 15,000
HRA40% of basic: 6,000
Other allowanceswas 26,478: 24,896
Wages under the codes15,000 + 9,412.87 added back: 24,412.87
PF, employee12%; was 1,800: −2,930
In-hand pay a month: 42,966

₹2,712 a month less in hand than the old way (₹45,678), and ₹2,260 more paid into PF.

An illustration in ₹, not tax or legal advice. The wages rise until they are half of all remuneration (gross pay plus the employer’s PF): ₹24,412.87. The employer’s PF rises from ₹1,800 to ₹2,930 and the gratuity provision from ₹722 to ₹1,174, both inside the same CTC. Professional tax and TDS are left at zero.

What it does not cover.

Check these with your CA or payroll team before you rely on the figure.

Income tax
The calculator doesn’t work out tax. Enter the TDS from your payslip, or what your CA estimates under the regime you chose.
Professional tax and labour welfare fund
Both are set by each state, with their own slabs and months. Enter professional tax as a monthly figure.
Smaller and exempted establishments
The calculator assumes PF at 12% and ESI where wages allow. Some establishments pay PF at 10%, and PF applies from 20 employees.
PF applies to every establishment with 20 or more employees. The employer’s rate is 10% of wages, or 12% where the Central Government notifies it.
Source: Code on Social Security, 2020, First Schedule and s.16(1)(a) (India Code), checked 17 Oct 2026
Pension scheme membership
An employee whose wages were over the ceiling when they joined is not in EPS, so the employer’s whole 12% goes to EPF. The cost is the same.
EPS membership is only for employees whose wages, on joining or on 17 September 2026, were not over the ₹25,000 ceiling.
Source: EPFO, wage ceiling FAQs, Q13, checked 17 Oct 2026
Low wages and ESI
ESI applies to establishments of 10 or more people in notified areas. Employees on a daily average wage up to ₹176 pay no ESI share; the employer still pays.
Employees on a daily average wage up to ₹176 are exempt from their ESI contribution; the employer still pays its share.
Source: ESIC, Contribution, checked 17 Oct 2026
Bonus, overtime and variable pay
The calculator works on fixed monthly pay. Overtime counts towards the 50% test when paid; incentives and variable pay are not wages.
Overtime allowance forms part of the 50% wage calculation.
Source: Ministry of Labour, Additional FAQs, 16 Mar 2026, Q1(a) and Q8, checked 17 Oct 2026
Minimum wages
The calculator doesn’t check your state’s minimum wage for the job. No employer may pay less.
Minimum wages are fixed by the appropriate government, and an employer may not pay less.
Source: Ministry of Labour, Additional FAQs, 16 Mar 2026, Q3, checked 17 Oct 2026

More payroll tools.

Salary under the new labour codes, and gratuity, with each rule shown. And the tools that go with this one.

Gratuity calculatorGratuity under the Code on Social Security, with the eligibility rules shown.Read more Compliance calendarGST, TDS, PF and ESI due dates, month by month, to add to your calendar.Read more ERP cost and ROI calculatorWhat an ERP would cost over three years, and the time it could save your team.Read more All free toolsGST, invoices, payroll, inventory and accounting tools, free and with no signup.Read more

Payroll that does this every month.

PrimoERP works out PF, ESI and TDS on each payslip and posts them to your books.

Payroll software for IndiaSalary structures, PF, ESI and TDS on salary each month, and payslips numbered in one series.Read more HR and payrollEmployees, attendance, leave and payslips, posted to your accounts every month.Read more AccountingSalaries, PF, ESI and TDS owed, posted to the ledger by cost centre.Read more Pricing for IndiaFour plans with users included, and published prices.Read more Payroll compliance in IndiaPF, ESI, professional tax and TDS on salary after the labour codes, with a monthly due-date calendar.Read more

Salary questions people ask.

1.

What is the 50% wage rule?

Under the labour codes, wages are basic pay, DA and retaining allowance. If HRA and the other allowances come to more than half of all pay, the amount over half is added to wages. PF, ESI and gratuity are then worked out on those wages.

— the PrimoERP team

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Salary calculator for the labour codes.