Your plant supervisor WhatsApps the OT sheet on the 28th — 340 hours across 22 workers, every entry rounded down to the nearest full hour because “that’s how we’ve always done it.” Payroll processes it, nobody complains, salary goes out on the 1st. Since 8 May 2026, that little rounding habit is an inspection finding waiting to happen.
An overtime calculator converts an employee’s monthly Basic + DA into an hourly rate and multiplies it by the statutory overtime rate — double wages under Indian law. Simple arithmetic. What changed in 2026 is not the multiplier but almost everything around it: the wage base, the rounding, the quarterly ceiling, and the consent trail. If your payroll sheet was built before November 2025, it is running on rules that no longer exist. Our free overtime calculator for India 2026 handles the arithmetic; this guide handles the compliance.
TL;DR — Overtime in India, August 2026
- Rate: Twice the ordinary rate of wages. Triggered beyond 8 hours a day for daily-wage workers, or 48 hours a week for everyone else.
- Wage base: For monthly-paid staff, daily wage = monthly wages ÷ 26. “Wages” now means Basic + DA + retaining allowance under the Code on Wages definition.
- Rounding: 15–30 extra minutes counts as 30 minutes. Anything above 30 minutes counts as a full hour. Rounding down is no longer defensible.
- Quarterly cap: 144 hours per quarter under the OSH (Central) Rules, 2026 — but your state’s older, lower cap may still bind you until the state notifies its own rules.
What counts as overtime in India in 2026?
Overtime is any work done beyond the statutory normal working hours, paid at twice the ordinary rate of wages. The Occupational Safety, Health and Working Conditions Code, 2020 came into force on 21 November 2025, and the Ministry of Labour and Employment notified the OSH (Central) Rules, 2026 through G.S.R. 345(E) dated 8 May 2026. Those rules are what your payroll team should actually be reading.
The trigger points are now written plainly:
- No worker may be required to work more than 48 hours in a week.
- For a worker whose wage period is daily, anything beyond 8 hours in a day is overtime.
- For everyone else, the test is the 48-hour week, not the individual day.
- Overtime wages are payable at double the normal wage, settled at the end of each wage period — not “adjusted next month.”
That last line is the one most SMEs quietly violate. If your wage period is monthly, OT earned in August must be paid with August salary. Carrying it into September to “balance the muster” is a default, even if the worker eventually gets every rupee.
Who is actually eligible?
Anyone whose minimum wage is fixed under the Code on Wages is eligible for overtime — which pulls in far more people than the old Factories Act did: factories, shops, warehouses, construction sites, motor transport, plantations and establishments with 10 or more workers. Genuine managerial roles with real decision-making authority sit outside it. Calling a floor supervisor a “manager” in the appointment letter does not. Inspectors look at duties, not designations.
The overtime formula that survives an inspection
The formula has two halves — get the base right, then apply the multiplier.
Hourly rate = (Monthly Basic + DA ÷ 26) ÷ 8
Overtime pay = Hourly rate × 2 × Overtime hours
The ÷ 26 divisor is not a convention any more; the OSH Rules specify that for monthly-paid workers, daily wages are the monthly salary divided by 26. Plenty of Indian payroll sheets still divide by 30, or by the actual calendar days in the month. Dividing by 30 understates the hourly rate by roughly 13% — small per hour, painful across 200 workers and four quarters of arrears.
Worked examples, all at 26 days and 8 hours:
| Employee | Monthly Basic + DA | Hourly rate | OT hours | OT payable (2x) |
|---|---|---|---|---|
| Machine operator, Bahadurgarh | ₹18,000 | ₹86.54 | 20 | ₹3,462 |
| Warehouse picker, Gurugram | ₹22,000 | ₹105.77 | 30 | ₹6,346 |
| QC technician, Pune | ₹28,000 | ₹134.62 | 16 | ₹4,308 |
| Packing helper, Ludhiana | ₹15,000 | ₹72.12 | 44 | ₹6,346 |
Note what is not in the base: HRA, conveyance, special allowance, incentives, and last year’s bonus. Only Basic + DA + retaining allowance go in. This is also where the 50% rule bites — if your excluded allowances exceed 50% of total remuneration, the excess is added back into “wages”, which quietly raises the overtime base too. If you have not restructured salaries yet, run a few employees through the CTC salary calculator first and see where your Basic actually sits.
The 15-minute rounding rule most payroll sheets ignore
The OSH Rules prescribe how fractional overtime is counted, and the direction is always upward:
| Extra time worked | Counted as |
|---|---|
| Under 15 minutes | Not counted |
| 15 to 30 minutes | 30 minutes |
| More than 30 minutes | 1 full hour |
Take a worker who stays back 35 minutes on twelve days in a month. Under the old habit of rounding to completed hours, that is zero. Under the rule, it is 12 hours of overtime — at ₹86.54 an hour and a 2x multiplier, ₹2,077 for one worker, one month. Multiply across a 60-person shop floor and you understand why this is the single most expensive line item HR teams are currently getting wrong.
You cannot apply this rule honestly with a paper register and a supervisor’s memory. It needs punch-level data. Biometric or automated attendance capture that timestamps every in and out is now less of a nice-to-have and more of an evidence file.
144 hours a quarter — but check your state first
The OSH (Central) Rules, 2026 cap overtime at 144 hours in any quarter. That is a meaningful increase from the old Factories Act ceiling of 50 hours a quarter, and it is a national standard for establishments under central jurisdiction.
Here is the trap. Labour is a Concurrent List subject. Until your state notifies its own rules under the OSH Code, the existing state cap continues to apply to establishments in state jurisdiction — and those caps vary widely.
| Position | Quarterly overtime cap | Applies to |
|---|---|---|
| OSH (Central) Rules, 2026 | 144 hours | Central-jurisdiction establishments (mines, major ports, railways, oilfields, central undertakings) |
| Older Factories Act baseline | 50 hours | Default in several states, including Haryana and Karnataka, pending state rules |
| States with raised limits | 75–125 hours | Includes Maharashtra and Gujarat, subject to current notifications |
Practical advice: do not plan production schedules on 144 hours until your state gazette says 144. If you run units in three states, budget for three different caps this financial year.
Overtime, PF and ESI: what gets deducted and what does not
Two rules that HR teams routinely mix up:
- PF is not payable on overtime. Overtime is expressly excluded from the definition of wages, so it does not enter the EPF base. See the EPFO guidance on wage components if you want the source.
- ESI is payable on overtime. Contributions of 3.25% employer and 0.75% employee apply to gross wages including OT. But overtime is excluded when testing the ₹21,000 coverage ceiling — so a worker on ₹20,000 who earns ₹3,000 OT does not fall out of ESI that month.
That second point creates the classic error: payroll sees ₹23,000 gross, drops the employee from ESI, and the establishment ends up with a contribution shortfall plus interest. If you want to sanity-check your numbers, the PF and ESI calculator will show you the split line by line.
What HR managers get wrong about overtime
- Calculating OT on gross salary. The base is Basic + DA, not CTC and not gross. Using gross overpays; using CTC is simply wrong.
- Dividing by 30 instead of 26. Understates every hourly rate on the sheet.
- Rounding down. The rule rounds up. Every partial hour above 30 minutes is a full hour.
- Offering comp-off to covered workers. Comp-off is fine for exempt white-collar staff. For workers covered under the OSH Code, overtime wages are a statutory entitlement — a day off does not discharge it.
- No written consent. Overtime under the codes is consensual, and women working before 6 a.m. or after 7 p.m. require written consent plus safe transport, lit premises and CCTV. Keep the consent on file.
- Paying OT late. It is due at the end of the wage period in which it was earned.
- Ignoring the 12-hour spread-over. Total clock-in to clock-out, breaks included, should not exceed 12 hours in a day — even when the OT itself is within limits.
- Missing the registration refresh. Establishments already registered must update details in Form-I on the Shram Suvidha Portal within six months of the Central Rules — roughly by early November 2026. Add it to your compliance calendar today.
Frequently asked questions
What is the overtime rate in India in 2026?
Twice the ordinary rate of wages. The OSH (Central) Rules, 2026 confirm double wages for work beyond 8 hours a day for daily-wage workers, or beyond 48 hours a week for all other workers. The older 1.5x practice under some Shops and Establishments Acts is being displaced as states align their rules with the Code.
How do I calculate overtime pay for a monthly-salaried worker?
Divide monthly Basic + DA by 26 to get the daily wage, divide that by 8 to get the hourly rate, then multiply by 2 and by the number of overtime hours. For ₹18,000 Basic + DA and 20 OT hours: ₹18,000 ÷ 26 ÷ 8 = ₹86.54 per hour, × 2 × 20 = ₹3,462.
What is the maximum overtime allowed per quarter?
The OSH (Central) Rules, 2026 set 144 hours per quarter. However, establishments under state jurisdiction remain bound by the existing state cap — anywhere from 50 to 125 hours — until that state notifies its own rules under the OSH Code. Check your state notification before scheduling.
Is PF deducted on overtime pay?
No. Overtime is excluded from the statutory definition of wages, so no provident fund contribution arises on it. ESI is different — ESI contributions do apply to overtime earnings, though overtime is ignored when checking the ₹21,000 coverage ceiling.
Is overtime pay taxable in India?
Yes, fully. Overtime is salary income, added to total earnings and taxed at the employee’s applicable slab. It also forms part of the gross figure used for monthly TDS, so a heavy OT month can push a worker into a higher deduction that quarter.
Can an employer force an employee to work overtime?
No. Under the labour codes overtime requires the worker’s consent, and the employer must keep a record of it. For women deployed on night shifts, written consent is mandatory alongside transport, adequate lighting and CCTV coverage of the premises.
Get the arithmetic off your plate
Overtime is not a hard calculation — it is a hard calculation to do 200 times a month without a single rounding error, on the right wage base, within the right state cap. Run this month’s numbers through the free EZHRM overtime calculator, and if the gaps look systemic rather than occasional, EZHRM’s payroll software computes overtime straight from punch data so nobody has to round anything by hand again.
Working through a wider compliance clean-up? The free HR calculators hub covers statutory bonus, full and final settlement and more, and there are further guides on the EZHRM blog. For the underlying notifications, the Ministry of Labour and Employment publishes the gazetted rules in full.