Dearness Allowance - Revised Rates.

Recommendation of Sixth Central Pay Commission - Decision of Government relating to the grant of Dearness Allowance to the Central Government Servants - Revised Rates.

New rates of DA has been announced on http://india.gov.in/govt/paycommission.php (http://164.100.50.223/six_pay_comm/allowances.pdf)

From 1-1-2006 : No Dearness Allowance
From 1-7-2006 : 2% of Basic Pay and NPA, where applicable
From 1-1-2007 : 6% of Basic Pay and NPA, where applicable
From 1-7-2007 : 9% of Basic Pay and NPA, where applicable
From 1-1-2008 : 12% of Basic Pay and NPA, where applicable
From 1-7-2008 : 16% of Basic Pay and NPA, where applicable

All the allowances and pension related queries are answered.1.But what about LTC? No circular has been issued by MoF so far on revised frequency and revised entitlement of LTC for CG employees. Any idea about this? 2. What about Family Planning Allowance? No orders on this by MoF so far. I think MoF have forgotten about the above two issues. Who will remind them? All CG employees are eagerly awaiting for the revised orders in respect of the above. Hope MoF sees this site and atleast after this, they issue the above two orders in a day or two without delaying any further so that all CG employees get to know the revised rules clearly without any scope for confusion.

Government clarifies, income-tax only on 40 per cent pay arrears this year

Government today said it would tax only 40 per cent of salary arrears to be paid to central government employees in the current fiscal on implementation of Sixth Pay Commission recommendations.
Generally speaking income earned in a year is taxed in that particular year, official sources said.

A section of the media today reported that the entire amount of arrears would attract tax this fiscal.

As per the notification issued by the government last month, central government employees will get 40 per cent of arrears during the current financial year and the remaining amount in the next financial year.

Government instructions issued on August 30, 2008, regarding fixation of pay and payment arrears consequent to implementation of the Sixth Central Pay Commission recommendations clearly states that in authorising the arrears income tax as due may also be deducted and credited to the government.

The arrears with effect from January 2006 would cost Rs 29,373 crore. Of the arrears, 40 per cent would be paid during the current year to the 50 lakh employees of the central government.

The revised pay scales will add Rs 4,500-5,500 crore to the government exchequer this fiscal in the form of personal income tax.

Besides, some money would also come through indirect taxes as some of the increased pay would go into buying products and services, official sources said here.

Incentive-based pay set to debut with science & tech department

The Union government will soon offer an incentive-based salary package for employees of some departments and allow recruitment from the private sector on contract, in line with the recommendations of the Sixth Pay Commission aimed at reforming the bureaucracy.

The department of science and technology, or DST, has already moved to put in place an incentive-based system, said a senior finance ministry official, who didn’t wish to be identified. “Once DST implements it, we expect there will be pressure on other government departments to follow suit,” this official added.
The government on 14 August accepted the Pay Commission’s recommendations, offering 5 million employees an average raise of about 21%.

According to the same finance ministry official, the cabinet has laid down that any government department was free to put in place a performance-related incentive system provided that it is “budget-neutral”, meaning the expense will have to be offset through savings in other expenditure.

The Sixth Pay Commission carried out a study through the Indian Institute of Management, Ahmedabad, on a performance-based incentive system. The study was aimed at working out a model whereby a base salary is attached to each post based on skills and responsibility; simultaneously, a second component would be payable over and above the salary on the basis of the productivity and performance of employees, either individually or as a group.

The study recommended an annual bonus of up to 20% to employees whose achievements exceed certain targets; this has been accepted by the cabinet. The government has also given in-principle approval to contractual postings in government departments of employees hired from private sector. Their pay scales and other emoluments will be decided later.
According to the official, the impact had been partially mitigated since the allowances, which are a key part of the emoluments structure, are to come into effect only from 1 September. The full impact would be realised only in the next fiscal; the official declined to share the estimates and Mint could not independently confirm the same.

For women government employees, there are some sweetners. Women employees will now receive 180 days of maternity leave as against 135 days previously. This can now be extended to two years, made up of accumulated leave; earlier this had been capped at one year.

“Another two-year childcare leave has also been granted which can be taken in parts till children reach the age limit of 18 years,” the official said. According to the official, this was the first time such a facility was being extended in government and had been modelled on what has already been adopted in Japan.

The government is also working out details to pay special allowances to paramilitary forces in line with the Rs6,000 per month allowance given to military personnel. Asked whether allowances for the paramilitary forces will be at par with the armed forces, the official said, “We would like to give an edge to the defence forces.”
The official also denied news reports that government has decided to tax 100% arrears that will be paid to government staff. The official said that as government employees will receive only 40% of arrears during the current financial year, they have to pay tax on only this amount.

History of Pay Commissions

Pay Commissions are periodically constituted to examine various issues such as pay and allowances, retirement benefits, conditions of service, promotion policies, etc. of the Central Government employees. There is no stipulation regarding any specific time period for constitution of a Pay Commission for Central Government employees. Till now five Central Pay Commissions have been constituted whose details are as below:-

First Pay Commission

• Date of Appointed : May, 1946
• Date of Submission of Report : May,1947
• Financial Impact (Rs. in Cr.) : NA

Second Pay Commission

• Date of Appointed : August, 1957
• Date of Submission of Report : August 1959
• Financial Impact (Rs. in Cr.) : 39.62

Third Pay Commission

• Date of Appointed : April, 1970
• Date of Submission of Report : March, 1973
• Financial Impact (Rs. in Cr.) : 144.60

Fourth Pay Commission

• Date of Appointed : June, 1983
• Date of Submission of Report : 3 Reports submitted in June, 1986; Dec. 1986 and May, 1987
• Financial Impact (Rs. in Cr.) : 1282

Fifth Pay Commission

• Date of Appointed : April, 1994
• Date of Submission of Report : January, 1997
• Financial Impact (Rs. in Cr.) : 17,000

Thus successive Central Pay Commissions were set up in the past at intervals of 10 to 13 years. The last Central Pay Commission was constituted in April, 1994.