Dear Mr. Srikanth,
For better understanding, we would like to quote the relevant section / rule stated under the Tamil Nadu Shops & Establishments Act about the overtime wages .
Sec. 31 - Wages for overtime work - where any person employed in any establishment is required to work overtime, he shall be entitled, in respect of such overtime work, to wages at twice the ordinary rate of wages.
Explanation: For the purpose of this section, the expression "ordinary rate of wages" shall mean such rate of wages as may be calculated in the manner prescribed.
Rule 10 - Manner of calculating ordinary rate of wages - For the purpose of the Explanation to section 31, ordinary rate of wages per hour shall be calculated by dividing the total wages payable to a person employed for the hours actually worked by him during the wage-period by the number of such hours in the wage-period.
Hope, you would be cleared now...So, calculating overtime wages, the Gross salary to be considered.
For an example: a person earning the gross salary of Rs. 10000/- in a month. Then, the per day wages will be Rs. 10000/- divided by 26 days. You will get one day salary, i.e for 8 hours. Again you have to divided in to 8, then you will get a per hour salary. It should be paid in double the wages towards OT.