Section 2 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
This article covers the remaining technical definitions in section 2 of the Code on Wages, 2019: accounting year (a), agricultural income tax law (c), company (e), co-operative society (h), corporation (i), direct tax (j), Income-tax Act (p), minimum wage (s) and same work or work of a similar nature (v). The last is the one that matters most for equal pay.
"Same work or work of a similar nature" (s.2(v)) is work where the skill, effort, experience and responsibility required are the same, when performed under similar working conditions, and any difference between employees of any gender is not of practical importance for the terms and conditions of employment. The "accounting year" begins on 1 April (s.2(a)). "Minimum wage" means the wage fixed under section 6 (s.2(s)). The others mainly serve the bonus chapter.
Section 2(v): same work or work of a similar nature
The definition has four ingredients.
| Ingredient | Text |
|---|---|
| Four factors | Skill, effort, experience and responsibility required are the same |
| Conditions | The work is performed under similar working conditions |
| Who | By employees (the clause then speaks of employees "of any gender") |
| Allowed difference | Any difference between the skill, effort, experience and responsibility required for employees of any gender is not of practical importance in relation to the terms and conditions of employment |
So the test is not the job title. Two people with different titles can be on the same work if the four factors are the same and the conditions are similar. Equally, two people with the same title may not be, if there is a difference that matters in practice to the terms of employment.
The definition feeds section 3, which bars discrimination on the ground of gender in matters relating to wages by the same employer for the same work or work of a similar nature, and s.4, which says a dispute whether work is of the same or similar nature is decided by an authority notified by the appropriate Government. For the old-law background on equal pay, see our comparison of the Equal Remuneration Act and the Code on Wages.
Payroll teams can use the four factors as a grid for job evaluation. Document each role's skill, effort, experience and responsibility, and the working conditions, so that any pay difference can be explained. Our payroll compliance audit service can help you build and review such a grid against your pay bands.
Example. A retail chain has a male and a female cashier in the same store, doing the same billing work with the same training and responsibility. Their pay must not differ on the ground of gender. If the male cashier also carries cash to the bank every evening, that is an extra responsibility and the employer should be able to show whether it is a difference of practical importance to the terms of employment. A difference that is not of practical importance does not take the two out of "same work".
Section 2(s): minimum wage
Clause (s) says "minimum wage" means the wage fixed under section 6. So the term in the Code refers back to the rate fixed by the appropriate Government after the process in s.8, subject to the floor wage in s.9. See section 6 for the fixing power. Clause (s) says "minimum wage", while s.5 uses the phrase "minimum rate of wages notified by the appropriate Government"; read them together.
Section 2(a): accounting year
"Accounting year" means the year commencing on the 1st day of April. It is the year used in the bonus chapter of the Code, where bonus is worked out for an accounting year. The clause does not say anything else, so it is simply 1 April to 31 March.
Section 2(e), (h) and (i): company, co-operative society, corporation
| Clause | Meaning |
|---|---|
| (e) company | A company as defined in clause (20) of section 2 of the Companies Act, 2013 |
| (h) co-operative society | A society registered or deemed to be registered under the Co-operative Societies Act, 1912, or any other law in force relating to co-operative societies in any State |
| (i) corporation | Any body corporate established by or under any Central Act or State Act, but not a company or a co-operative society |
These three definitions sort employers into categories. A "corporation or other authority established by a Central Act" appears in the definition of the appropriate Government in s.2(d)(i), and payments to a co-operative society appear in the list of permitted deductions in the deductions chapter (s.18(2)). A corporation, a company and a co-operative society are mutually exclusive in the Code: a corporation by definition is not a company or a co-operative society.
Section 2(c), (j) and (p): agricultural income tax law, direct tax, Income-tax Act
| Clause | Meaning |
|---|---|
| (c) agricultural income tax law | Any law for the time being in force relating to the levy of tax on agricultural income |
| (j) direct tax | (i) Any tax chargeable under: (A) the Income-tax Act, 1961; (B) the Companies (Profits) Surtax Act, 1964; and (C) the agricultural income tax law; and (ii) any other tax which, having regard to its nature or incidence, may be declared by the Central Government by notification to be a direct tax for the purposes of the Code |
| (p) Income-tax Act | The Income-tax Act, 1961 |
The definition of "direct tax" is used in the bonus computation, where direct tax payable by the employer for the accounting year is deducted in working out available surplus. The Code names the Income-tax Act, 1961 as written. The Income-tax Act, 2025 has replaced it from 1 April 2026; this article gives no new section numbers, and for treatment under the new Act see our income-tax guides. The Code's text, as enacted, does not itself refer to the 2025 Act, so check how a later notification or rule treats the reference when you compute bonus.
The surtax law named in (j)(i)(B) is the Companies (Profits) Surtax Act, 1964. The Central Government can add other taxes under (j)(ii) by notification only; none is listed in the text.
Practical points
- Job grid. Keep the four-factor evaluation on file for roles where men and women work side by side.
- Bonus year. For bonus, use the 1 April accounting year, not the calendar year.
- Taxes. When bonus is computed, identify the direct tax heads actually payable and check for any notified addition under s.2(j)(ii).
- Entity type. Record whether the employer is a company, a co-operative society or a corporation, since the Code names each of them in different places.
- The Central Rules apply only where the Central Government is the appropriate Government; where the State Government is, the State's own wage rules apply.
Need help with pay equity and bonus definitions?
If you need to defend a pay difference between roles, or to set up the bonus computation with the right tax and year definitions, our payroll compliance audit team can review your grades, payroll data and bonus workings against the Code.
Key takeaways
- Same work or work of a similar nature turns on skill, effort, experience and responsibility, under similar working conditions, with differences of no practical importance disregarded.
- The accounting year begins on 1 April.
- "Minimum wage" means the wage fixed under section 6.
- A corporation is a body established by or under a Central or State Act and is neither a company nor a co-operative society.
- "Direct tax" covers the Income-tax Act, 1961, the Companies (Profits) Surtax Act, 1964, agricultural income tax law and any tax notified by the Central Government.
Read next
- Sections 3 and 4: gender discrimination in wages
- Section 2(y): definition of wages
- Section 6: fixation of minimum wages
- Equal Remuneration Act versus the Code on Wages
Disclaimer: Based on the Code on Wages, 2019 (as enacted) and, where noted, the Code on Wages (Central) Rules, 2026 (G.S.R. 343(E), 8 May 2026), as on 1 October 2026. The Code is in force from 21 November 2025; State Governments make their own rules for establishments where the State is the appropriate Government, and wage rates are notified separately. Verify the current position before acting.