Salary Structure Calculator
Labour Codes 2026: Basic + DA at 50% of pay or more, with PF, ESI, gratuity, professional tax and in-hand pay. An estimate; the assumptions are listed below the table.
| Component | Monthly |
|---|
Assumptions: total remuneration for the 50% test is the monthly gross pay, and HRA and the balancing allowance are treated as allowances the Code excludes from wages. PF, gratuity provision and the add-back use those Code wages. PF is 12% each side, rounded to the rupee; PF administration and insurance (EDLI) charges are not included. ESI is 0.75% and 3.25% of gross when gross is ₹21,000 or less, rounded up to the rupee. Gratuity provision is 4.81% of wages (15 ÷ 26 ÷ 12), a common provisioning rate, not a statutory contribution. Professional tax is worked out on monthly gross. Income tax (TDS), bonus, LWF and reimbursements are not included. An estimate, not legal or tax advice.
Free tool · Labour Codes 2026
Build a salary structure where Basic + DA is at least 50% of pay, and see what it costs and what the employee takes home.
Enter a monthly CTC or gross. The calculator splits it into Basic + DA, HRA and allowances, and adds employer PF, ESI and gratuity provision, employee PF and ESI, and professional tax for your state.
How the calculator works
Five steps, the same ones a payroll team follows when it restructures salaries for the Labour Codes.
- Start from CTC or gross. If you enter CTC, the calculator finds the highest monthly gross that fits once employer PF, ESI and gratuity provision are added on top.
- Set Basic + DA. 50% of gross by default. You can choose a different share; below 50%, the calculator shows how much is added back to wages.
- Add HRA and a balancing allowance. HRA is 50% of Basic + DA in a metro and 40% elsewhere. Whatever is left of gross becomes “other allowances”.
- Work out employer and employee contributions. PF at 12% each side, on full wages or restricted to the ₹25,000 ceiling. ESI if gross is ₹21,000 or less. Gratuity provision at 4.81% of wages.
- Deduct professional tax for the state you pick, and show in-hand pay before income tax (TDS).
The 50% rule, explained
Under the Code on Wages, in force since 21 November 2025, “wages” means basic pay, dearness allowance and retaining allowance. Items such as HRA, conveyance and the employer’s PF contribution are left out. But if the excluded items add up to more than 50% of total pay, the amount above 50% is added back to wages (section 2(y)). The Code on Social Security uses the same definition, so the higher figure is used for gratuity and can change PF.
Worked example: monthly gross pay of ₹50,000 in a metro, PF restricted to the ₹25,000 ceiling. Structure A keeps the old habit of a 30% basic. Structure B moves Basic + DA to 50%.
| A: Basic 30% | B: Basic 50% | |
|---|---|---|
| Basic + DA | ₹15,000 | ₹25,000 |
| Excluded allowances (HRA and others) | ₹35,000 (70% of pay) | ₹25,000 (50% of pay) |
| Added back (above 50%) | ₹10,000 | Nil |
| Wages for PF and gratuity | ₹25,000 | ₹25,000 |
| Employee PF, 12% | ₹3,000 | ₹3,000 |
| Employer PF, 12% | ₹3,000 | ₹3,000 |
| Gratuity provision, 4.81% | ₹1,203 | ₹1,203 |
The statutory cost is the same either way: once the add-back is applied, structure A has the same wages as structure B. What changes is that B is clean on paper. Payslips, PF returns and gratuity all use a Basic + DA figure that already meets the rule, with no hidden add-back for someone to miss. Before the Codes, structure A would have meant PF of ₹1,800 a side and a gratuity provision of ₹722, which is why many employers saw costs rise when the Codes came in. See what the new Labour Codes change for payroll.
What the calculator assumes
It gives an estimate for planning. These are the choices behind the numbers.
- Total pay for the 50% test is monthly gross pay. HRA and the balancing allowance are treated as allowances the Code excludes. Whether a particular “special allowance” counts as wages depends on what it is paid for, so check your own structure.
- PF is 12% from the employee and 12% from the employer, on Code wages, either in full or restricted to the ₹25,000 wage ceiling (in force from 17 September 2026). The employer’s pension (EPS) share is 8.33% of wages up to ₹25,000. PF administration and EDLI insurance charges are not included.
- ESI is 0.75% from the employee and 3.25% from the employer, on gross pay, when gross is ₹21,000 a month or less, rounded up to the rupee.
- Gratuity provision is 4.81% of wages. That is 15 days’ wages for every 26 working days, spread over 12 months. It is a common way to provide for gratuity in CTC, not a contribution the law requires each month. See the gratuity calculator for the actual payout.
- Professional tax uses the slabs on our state pages for Maharashtra, Karnataka, Gujarat, Telangana and West Bengal, worked out on monthly gross. Delhi and Uttar Pradesh do not levy it. For Tamil Nadu and other states it is not calculated yet.
- Not included: income tax (TDS), statutory bonus, Labour Welfare Fund, reimbursements and benefits such as insurance. All amounts are rounded to whole rupees.
Frequently asked questions
Is it mandatory for basic salary to be 50% of CTC?
No rule says basic must be 50%. The Code on Wages says that if excluded allowances are more than 50% of total pay, the excess is added back to wages for statutory purposes. Keeping Basic + DA at 50% or more simply means nothing needs to be added back. The test is on total pay, which most employers read as gross pay rather than CTC.
Which allowances are excluded from wages under the Labour Codes?
The Code lists items such as HRA, conveyance allowance, the employer’s PF and pension contribution, statutory bonus, overtime, commission and gratuity. Basic pay, dearness allowance and retaining allowance are always wages. Anything not on the excluded list is generally treated as wages too.
Does the 50% rule increase PF?
It can. If allowances are added back, PF is worked out on the higher wages. If you restrict PF to the ₹25,000 wage ceiling and wages are already at or above it, PF does not change. Gratuity is worked out on the higher wages either way.
Will in-hand salary fall if basic is raised to 50%?
Raising basic to 50% does not by itself change PF or gratuity, because the add-back already counts wages as at least 50% of pay. The change came with the Codes: compared with an old structure built on a low basic, PF can rise where it is on full Basic + DA or where wages were below the ₹25,000 ceiling, and the gratuity provision rises. With the same CTC, the extra employer cost reduces gross pay and the extra employee PF reduces take-home, while retirement savings and gratuity go up.
What does 4.81% gratuity in CTC mean?
Gratuity is 15 days’ wages for each year of service, with a month taken as 26 working days. Spread over a year, that is 15 ÷ 26 ÷ 12, about 4.81% of monthly wages. Many employers show it in CTC as a monthly provision. The employee receives gratuity only when they leave after qualifying service, usually five years, or one year for fixed-term staff.
Why is professional tax not calculated for my state?
We only use professional tax slabs that we have checked against the state’s own notification and published on our site. For Tamil Nadu and other states not in the list yet, the calculator says so instead of guessing. See professional tax by state.
Set up this structure in HivePayroll: free up to 10 employeesSalary components, PF, ESI, PT and TDS calculated in every payroll run, with payslips and statutory files from the same run. Questions? Email support@hivepayroll.co.in.
Based on the Code on Wages, 2019, the Code on Social Security, 2020, the PF wage ceiling notification S.O. 5109(E) and the professional tax slabs on our state pages, as of 3 October 2026. An estimate, not legal or tax advice.
