Last Updated on September 16, 2026 by [email protected]
October is one of the two big months for wage changes in India. So if you run payroll for a small team, a minimum wage revision can quietly make last month’s salaries non-compliant. This guide explains what changes, how to find the rates that apply to you, and exactly what to update.
What is a minimum wage revision?
A minimum wage in India usually has two main parts. First, there is a basic rate. Second, there is a variable dearness allowance, or VDA, which moves with inflation.
A minimum wage revision happens when the government updates the VDA, or resets the basic rate itself. Rates also differ by skill level, such as unskilled, semi-skilled, skilled and highly skilled work. In addition, they often differ by area or zone.
Why does 1 October matter?
For central sphere employment, the government revises the VDA twice a year. The changes take effect on 1 April and 1 October, based on the Consumer Price Index for industrial workers. The Chief Labour Commissioner (Central) notifies the new rates.
Central sphere covers establishments under central government authority, such as railways, mines, major ports and central public sector undertakings. So most private startups and SMEs are not in it.
Which minimum wage revision applies to a small business?
Most small businesses follow the minimum wages set by their state government. However, states do not all work on the same calendar. Some revise VDA twice a year, while others revise it once a year or on their own schedule.
That is why a single national date is not enough. Instead, check the notification for every state where you have staff, including remote employees. Our state-wise compliance guides are a good starting point.
There is also a national floor wage under the Code on Wages, 2019. Once notified, no state can set a minimum wage below it. However, as of September 2026, the Centre had not yet notified that floor.
What should you update after a minimum wage revision?
A revision takes effect on the notified date. You do not need to send each employee a letter first. Still, your payroll must reflect it from that date. Work through this checklist:
| What to check | Why it matters |
|---|---|
| Each employee’s category and zone | Rates differ by skill level and area, so the wrong category means the wrong rate |
| Basic pay plus DA against the new rate | Anyone below the revised figure needs a correction from the effective date |
| Overtime rates | Overtime pay is twice the normal rate, so it rises too |
| The 50% wage rule | Raising basic pay can change how allowances count for PF and gratuity |
| ESI coverage | Staff near the ₹21,000 ESI wage limit may move in or out |
| Statutory bonus | Eligibility and the calculation base both link to wage levels |
| Arrears | If the notification arrives late, you may owe back pay from the effective date |
How does a minimum wage revision affect other payroll costs?
The revision itself is usually small. However, the knock-on effects add up across a team.
For example, you calculate overtime on the normal rate of wages, so a higher base lifts every overtime hour. Likewise, PF is 12% of basic wages, so any rise in basic pay also raises the employer’s PF share. Our ESIC wage ceiling guide explains what happens when staff cross the ESI limit.
Bonus links to it too. Under the Code on Wages, you calculate bonus on ₹7,000 or the Central Government minimum wage, whichever is higher. So a revision can raise your bonus bill as well. See our guide to statutory bonus in India for the full rules.
What happens if you miss a minimum wage revision?
Paying less than the minimum wage breaks the Code on Wages. A first offence can bring a fine of up to ₹50,000, while repeat offences carry heavier penalties. In addition, employees can claim the difference as arrears.
Because revisions keep coming, treat them as a routine payroll task. Add the April and October dates, plus your state’s own dates, to your statutory compliance calendar. You can follow central updates on the Ministry of Labour and Employment website.
Frequently asked questions
When is the next minimum wage revision in India?
For central sphere employment, the government revises the variable dearness allowance twice a year, effective 1 April and 1 October. State governments set their own revision schedules, so private employers should check the notifications for each state where they have staff.
Does the October minimum wage revision apply to private companies?
The 1 October central revision applies to central sphere employment, such as railways, mines, major ports and central public sector undertakings. Most private companies follow state minimum wages instead, which each state revises on its own schedule.
Do employers need to inform employees about a minimum wage revision?
A minimum wage revision takes effect automatically from the notified date, so you do not need to send individual letters first. However, employers must update payroll from that date and pay any arrears if they processed salaries below the revised rate.
Is there a national floor wage in India?
The Code on Wages, 2019 allows the Central Government to set a national floor wage, below which no state can fix its minimum wage. As of September 2026, the Centre had not yet notified that floor wage under the Code.
Never miss a wage change again
HRTailor’s payroll processing service keeps your payroll, overtime and statutory costs in line with each minimum wage revision that applies to you. So your team gets paid right, every month.
This guide is general information, not legal advice. Please confirm the rates for your state and industry with your payroll or legal adviser.
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