Overtime Calculator — Calculations & Slabs for FY 2026-27

Under the Factories Act 1948, factory workers must be paid at twice the ordinary rate for overtime work. However, for IT companies and other establishments governed by state Shops & Establishments Acts, the overtime rate may be 1.5× or may be left to company policy. Always check your employment contract or HR policy.

The standard method divides your monthly basic salary by the number of standard working hours in a month. Most companies use 208 hours (8 hours × 26 working days). Some companies use 176 hours (8 hours × 22 working days). Your payslip or HR policy will specify which denominator applies to you.

Overtime is always calculated on the basic salary component, not the full CTC. CTC includes employer PF contributions, gratuity, and perquisites that are not part of your working pay rate. Only the basic wage (and sometimes dearness allowance in certain industries) is used to compute the hourly overtime rate.

Yes, overtime pay is fully taxable as salary income. It is added to your total annual income and taxed at your applicable slab rate. Your employer deducts TDS from your total salary including overtime. There is no separate exemption for overtime pay under the Income Tax Act.

The Factories Act caps overtime at 50 hours in a quarter for factory workers. For most office workers, there is no statutory cap, but the total working hours including overtime should not exceed 9 hours per day or 48 hours per week. Any work beyond this must be compensated at the overtime rate.