Showing posts with label Newspaper Reports. Show all posts
Showing posts with label Newspaper Reports. Show all posts
Thursday, September 4, 2008
Wednesday, September 3, 2008
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.
Tuesday, August 26, 2008
Whoever said the govt employees were ill-paid?
The report of the Sixth Pay Commission has been accepted by the government with some generous addition. Various experts from the academia and media have given their verdict in its favour, saying the government babus are overworked and underpaid and deserve the hike. Some have even made bizarre observations such as a possible reduction in corruption following the hikes.
Central govt employees' pay hiked by 21%
But it is one of the multitudes of myths in our society that the babus are ill-paid.
Most of the discussion on the emoluments of the government employees focuses on the senior level positions like that of Secretary etc. But more important is the positions at the lower end of the hierarchy.
There was an interesting news item sometime ago about there being over 11,000 applicants for just three posts of peons advertised by the Haryana Electricity Regulatory Commission.
This is hardly surprising considering the lower the category of position in government the larger is the number of aspirants. The salary and perks in government are significantly higher than those of the private sector at the lower levels.
Reports suggest that post-implementation of the Pay Commission report, the lowest-level worker will get more than Rs 10,000 per month as pay.
In the private sector, a peon or similar-category position might fetch around Rs 3,000 or at best Rs 5,000.
An important consideration is the hours of work involved.
It is suggested that in many a private sector job people are paid Rs 20,000 or even Rs 30,000 at entry, while government babus slog a number of years to reach there.
But, such discussions do not take into account the fact that people with coveted private sector jobs, such as a software professional or investment banker, put in more than 70 hours per week. Even executives at lower levels can be seen slogging from 8 am to 8pm or 9 pm daily.
The situation is far worse in the non-corporate sector, wherein a clerk or accountant has to slog it out for half the government servant’s pay with double the number of hours and without adequate holidays.
Contrast this to a typical state secretariat or central government office. There is hardly 3-4 hours of work and that to for five days of the week. This works out to 25 hours per week at best.
How then can we compare the salaries between the government and the private sector?
The second issue is that of part-time businesses undertaken by government employees, often during working hours.
Many lower level employees have entrepreneurship and are involved in poultry, gas agency, retail stores, barber shops, chits or micro-financing at usurious rates etc. These alternate businesses provide flexi-incomes while the government job offers a fixed income stream. Employees such as corporation sweepers and electricity linemen commonly outsource their jobs to others and carry on other, more paying business. For a private sector employee, this would be unthinkable.
The third issue pertains to bribes, which is perhaps the most attractive part of a government job.
Raids by the Lokayuktha in Karnataka provide proof of unbelievable levels of corruption, with small-time commercial tax inspectors or police constables often found to possess assets worth crores of rupees, a substantial portion of it in cash.
Such corruption hurts the poor much more than the rich.
The India Corruption study 2007, brought out by the NGO Transparency International and Centre for Media Studies, found that about one-third of households below poverty line bribed officials to get a service from police to personnel in the public distribution system. The study found that nearly Rs 900 crore is paid as bribes by the poor.
For example, according to a recent report, in a government hospital in Bangalore, one has to pay Rs 300 for being shown a newborn baby boy and Rs 200 in case of a baby girl by the hospital employees. It is difficult to think such practices will cease with the pay hikes.
Hence, if we consider hourly pay, including bribes, government employees are an extremely pampered lot. So much so one could well question the need to pay them a fixed salary at all. Rather, they should be asked to share a portion of their extra income with the government. That would be a trend-setting move.
Article by: R Vaidyanathan/ DNA MONEY | Tuesday, 26 August , 2008
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