Latest Minimum Wages in India 2025

Minimum wages in India are the minimum payments any business makes to its employees. As of November 21, 2025, these are strictly governed by the “Code on Wages, 2019,” which has replaced the old “Minimum Wages Act 1948.” For all businesses, it is crucial to understand these changes, as the new laws bring stricter penalties and universal coverage. For example, this Code allows every worker in India (organized or unorganized) to lodge legal complaints against firms that underpay them.

Every business, including international firms operating in India, must adhere to the Minimum Wages in India. So if you are operating in India, you need to ensure accuracy while calculating minimum wages for each employee. Wage variations arise from factors such as region, industry, skills, and the nature of the work. The official India Minimum Wages, updated for 2025-26 across all states and private sectors, outlines the mandatory minimum wage in India per month that every employer must ensure.

Now we will take a look at the Code on Wages, 2019 and the methods for calculating it under the new rules.

What are the Minimum Wages in India?

Minimum wages in India are now regulated under the “Code on Wages, 2019.” The Code is enforced by the Government of India to protect employees from exploitation and ensure specific minimum remuneration. A major change is the introduction of a “National Floor Wage.” While states still define their rates, they cannot set wages lower than the National Floor Wage fixed by the Central Government.

The Code on Wages covers:

• Universal Applicability: It mandates the minimum employee payment that each employer must pay, covering all sectors and industries universally, unlike the old law which was restricted to specific jobs.
• Standardized guidelines on payment modes.
• Mandatory annual revision of wages based on inflation (VDA).
• Establishment of National and State Advisory Boards.
• Minimum wages for employees across skill levels.
• Stricter compliance requirements and higher penalties for violations.

Minimum wages in India are decided based on the Consumer Price Index (CPI). Plus, the Code considers Basic Pay, Dearness Allowance (DA), and Retaining Allowance as the primary components for calculation. The law ensures the country meets the “Living Wage” concept given by the ILO.

India’s four new labour codes have now merged 29 regulations, strengthening employee protections. These include: Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020 and Occupational Safety, Health and Working Conditions Code, 2020. All businesses—whether full-time, contract, part-time, or gig/digital platform—must comply

Types of Workers or Labor

The Code on Wages categorizes labour into four distinct types for wage fixing:

Unskilled Labour

The unskilled labourer is the one who carries out simple tasks and duties and requires no previous experience for the job. Such labourers often require initial training to provide better familiarity with the tools and machines. The minimum wage for unskilled labour in India is revised each year to meet living cost standards.

Skilled Labour

Skilled labourers can carry out specific tasks with little assistance. Such labourers have expertise in delivering tasks in less time. The minimum wage for skilled labour in India 2025 26 reflects higher expertise and demand in current wage schedules.

Semi Skilled Labour

Semi skilled labourer is the type who carries out most of the tasks but needs training to perform advanced functions. Employers should always check minimum wages of the respective state set for semi-skilled manpower before budgeting.

Highly Skilled Labour

Highly Skilled Labourer is Trained for Complex Tasks and Operations that Require Expertise. Examples Include Project Managers, Scientists, Doctors, and Software Developers.

The New Legal Framework: Code on Wages, 2019 (Effective Nov 2025)

The “Code on Wages, 2019” is now the active law, consolidating four older laws: The Minimum Wages Act (1948), The Payment of Wages Act (1936), The Payment of Bonus Act (1965), and The Equal Remuneration Act (1976).

Key Provisions Effective Now:

• New Definition of “Wages” (The 50% Rule): Wages now include Basic Pay, Dearness Allowance, and Retaining Allowance. These three components must constitute at least 50% of the employee’s total Cost to Company (CTC). If they are less than 50%, the excess allowances are added back to “Wages” for calculation purposes (like PF and Gratuity).
• National Floor Wage: The Central Government fixes a floor wage based on minimum living standards. No State Government can fix a minimum wage below this floor.
• No Gender Discrimination: The Code strictly prohibits discrimination based on gender in matters of wages and recruitment.
• Timely Payments: Wages must be paid by the 7th of the following month for most establishments.
• Payment Modes: Wages must be paid via coin, currency notes, cheque, or credited directly to the bank account (digital mode is preferred).
• Bonus Eligibility: The Code mandates an annual payment of a bonus (minimum 8.33% of wages) for eligible employees.
• Gratuity for Fixed-Term Employees: Fixed-term employees are now eligible for Gratuity after just 1 year of service (previously 5 years).
• Gig Worker Contributions: Aggregators (delivery/ride apps) must now contribute 1-2% of annual turnover to a Social Security Fund.
• Free Health Check-ups: Employers must facilitate free annual health check-ups for employees above age 40.
• Women in Night Shifts: Women are now legally permitted to work in all sectors during night shifts (7 PM – 6 AM) with safety guarantees and consent.

How to Calculate Minimum Wages in India?

The calculation of minimum wages in India needs consideration of multiple factors right from the location of business, type of industry, cost of living, and skill level. Apart from these there are components of minimum wages like VDA and HRA that you need to consider while calculating it.

Components of Minimum Wage Calculation:

• Basic Wage: A fixed amount paid to a worker, influenced by the cost of living and market rates. Under the new Code, this must be a substantial part of the salary structure.
• Variable Dearness Allowance (VDA): VDA is a crucial part of a worker’s salary, adjusting for inflation. It is based on the Consumer Price Index (CPI) and is typically revised twice a year (April and October).
• House Rent Allowance (HRA): HRA covers housing expenses. Note: Under the new Code, excluded allowances like HRA cannot exceed 50% of the total remuneration.

Regular Revision

In India, Minimum wages are not static. The Code mandates that the Central and State governments review and revise minimum wages at intervals not exceeding five years, while VDA is revised every six months.

Regional Disparities and the “Floor Wage”

One of the major challenges has been the wide variation in wage floors across states.

• Example: Unskilled labor in Punjab might be ₹11,389.
• Example: Unskilled labor in Delhi might be ₹18,066.

Update: With the implementation of the National Floor Wage, any state whose wages were previously lower than the Central Floor rate must now increase them to match the national standard immediately.

Current Minimum Wages in India by State (2025-26 Estimates)

Compliance and Penalties (Updated)

The Code on Wages, 2019, establishes stricter compliance requirements and penalties for organizations than the old 1948 Act.

Employer’s Responsibility

Employers are required to pay workers the minimum wages set by the Central or state government (whichever is higher). The employer cannot pay less than the minimum wage or make any deductions except as permitted by the Code.

Penalties and Legal Actions for Non-Compliance

The penalties for non-compliance have been significantly increased under the new Code:

1. Payment Less Than Minimum Wage: Employers who pay less than the minimum wage can be punished with a fine of up to ₹50,000.
2. Repeat Offense: If the employer commits the same offense again within 5 years, they can face imprisonment for up to 3 months and/or a fine of up to ₹1 Lakh.
3. Contravention of Other Provisions: For contravening any other provision (like record keeping), the fine is up to ₹20,000.
4. Claim Application: An employee can file a claim for unpaid wages. The burden of proof to show that wages were paid lies with the employer.

Conclusion

Minimum Wage India 2025 compliance is crucial. Staying updated with the Code on Wages, 2019 helps organizations protect workers and avoid legal issues. The Code ensures Universal Coverage, protecting every employee in India. Businesses must consider the “Floor Wage,” the “50% CTC Rule,” and strict timelines for payments to avoid the newly increased penalties.

Frequently Asked Questions (FAQ)

What are the Factors that Impact Minimum Wages in India Now?

The factors include the National Floor Wage, the state/region development level, industry, skill level, and the Cost of Living Index (CPI).

How Often are Minimum Wages Revised in India?

Minimum wages (VDA) are typically revised twice a year (April and October) to account for inflation. The basic structure is reviewed at least every five years.

Is the Minimum Wage in India 26 Days or 30 Days?

While the wage is often quoted as a “Monthly” figure, the calculation for a daily rate usually divides the monthly rate by 26 days (accounting for one weekly off). However, the salary is paid for the full month cycle.

Which State in India has the Highest Minimum Wage?

Delhi has the highest minimum wage, ranging from ₹17,000 to ₹25,000 per month.

What are the Penalties for Companies Not Paying Minimum Wages?

Under the Code on Wages, fines can go up to ₹50,000 for the first offense and include imprisonment for repeat offenses.

Who is Responsible for Fixing Minimum Wages in India?

The Central Government sets the National Floor Wage. State Governments fix their own rates, provided they are not lower than the Central Floor Wage.