Overtime Salary Calculator India (OT Pay Calculator)

Factory employers must maintain Form 10 (Register of Adult Workers) under the Factories Act and its State Rules. This register must show daily start/end times, total hours, overtime hours separately, OT wages paid, and the worker's signature. The register must be kept for at least 3 years and made available to any labour inspector on demand.

Shops and Establishments employers must maintain the equivalent register prescribed under their state's Shops Act Rules — typically an Attendance-cum-Wage Register or Register of Employment. Under the Code on Wages, 2019 (Sections 13 and 14), all employers must also issue wage slips that include a clear overtime line item.

Failure to maintain these registers is independently punishable under both the Factories Act (Section 92) and the Code on Wages (Section 54), even if overtime was actually paid correctly.

This is one of the most frequently misunderstood areas of Indian overtime law. Under the Factories Act, Section 59, overtime must be compensated in wages at double the ordinary rate — compensatory off (time off in lieu) is not a valid substitute under the Factories Act. An employer who gives comp-off instead of overtime wages is technically in violation, even if the worker agrees.

In practice, many IT companies and service-sector employers operate comp-off policies, and some state Shops Acts are less explicit on this point, creating a grey area. The safest legal position: pay the overtime wages, and then optionally provide comp-off as an additional benefit if policy allows.

Under the OSH Code 2020 (when notified), the position is expected to remain the same — overtime pay in wages is mandatory. Comp-off can supplement but not replace overtime wage payment. HR teams should update their policies and avoid relying on verbal agreements.

No — overtime pay is excluded from the PF wage base under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The EPF wage base ("basic wages" as defined under the EPF Act) does not include overtime earnings. Employers do not need to deduct the 12% PF contribution on overtime pay, and no matching employer contribution is required on OT amounts.

However, overtime is included in gross salary for income tax and TDS purposes. ESIC calculations similarly exclude overtime in the definition of "wages" for contribution purposes — though employers should verify current ESIC circular guidance, as interpretations have varied by state. Use our ESIC eligibility checker to verify contribution thresholds for your workforce.

All unpaid overtime earnings must be included in the Full and Final Settlement on an employee's last working day or within the timeline mandated by state law (typically within 2 working days under some state Shops Acts). Failing to include overtime arrears in FnF is treated as wage theft under the Code on Wages, 2019.

HR teams should run an OT reconciliation specifically as part of every FnF process — compare attendance/swipe data with all payslips from the entire employment period. Accumulated arrears from consistent small underpayments can be significant and carry interest liability under some state rules.

Overtime earnings paid in FnF are taxable in the year of receipt and must be reported in the employee's Form 16. Verify tax impact using our salary tax calculator.

When business needs require overtime beyond the state limit (50–75 hours/month), the employer must obtain prior written approval from the Chief Inspector of Factories (or equivalent labor authority) for the relevant state. The formal application must cite:

• The reason for excess overtime (urgent orders, seasonal demand, plant emergency)
• The specific departments and number of workers involved
• The estimated additional hours per worker per month
• Confirmation that overtime wages at 2× will be paid in full

Approval is at the authority's discretion and typically time-limited (3–6 months). Operating without this approval while exceeding limits makes both the company and the named factory manager personally liable under Section 92 of the Factories Act.

No — this is explicitly illegal under Indian labor law. Overtime pay is a wage entitlement — not a discretionary bonus or performance incentive that can be withheld or adjusted. The Code on Wages, 2019 (Section 18) prohibits deductions from wages except for specific, legally defined purposes: fines, absence from duty, housing loans, PF/ESI, advance recovery, and a few others. Disciplinary deductions from overtime wages are not among the permissible deductions.

Attempting to withhold OT as a disciplinary measure exposes the employer to a complaint under both the Code on Wages and the Factories Act, and to an unfair labor practice complaint if the worker is a union member. Maintain a strict separation between disciplinary processes and wage payment obligations.

Common HRMS configuration mistakes that lead to OT underpayment:

• Wrong hourly base: Some HRMS systems default to 30 days × 8 hours = 240 hours instead of actual working days (e.g., 22 × 8 = 176 hours). This underestimates the hourly rate by ~27% and underpays OT significantly. Correct to your actual working days per month.
• Wrong OT multiplier: Systems sometimes default to 1.5× (US FLSA standard) instead of the Indian mandatory 2×. Always verify the multiplier in your payroll configuration.
• OT excluded from gross for TDS: Some systems treat OT as a non-taxable allowance. OT must be part of taxable gross salary for TDS computation.
• Missing rest-day differential: HRMS systems rarely have separate rate logic for Sunday/holiday work. Add a separate "Rest Day OT" pay component at 2.5×–3× to capture this legally required premium.

Use this Overtime Salary Calculator to spot-check your HRMS output monthly with a sample of employees across salary bands. If results differ, your configuration needs correcting before payroll runs.

During a Factories Act or Shops Act labor inspection, the inspector typically checks:

• Form 10 (OT Register): The primary document. Checked against attendance records for consistency.
• Wage/salary registers: To verify OT was paid at correct 2× rate and appears as a separate line item.
• Time cards or biometric attendance data: Cross-referenced with Form 10 to detect undercounting of overtime hours.
• Payslips: Sample payslips checked to confirm OT is shown separately with hours and rate.
• Bank transfer records: Increasingly checked to verify wages were actually transferred, not just shown as paid on paper.
• Approval letters for excess OT: Required if any employee exceeded the state monthly limit in any month under review.

Inspectors typically examine the last 12–24 months of records. Having all of these in order — ideally as part of a quarterly HR audit — is far less costly than post-inspection penalties and arrear payment orders.