When the pandemic is hitting hard, every penny seems to be an important one. Every investment that is yielding benefits makes you happy. And on the other hand, every tax, every deduction, and every cess makes you frown on the things happening around you.
People somehow survived the first wave of the pandemic and were slowly getting back to normal. However, the second wave has hit hard and the wave is taking a toll on the Government as well. In order to cut a few expenses and increase the funds to COVID-19, the Union Government has come to a decision regarding the 7th Pay Commission (7CPC) and Dearness Allowance related to it. To know more about the new Central Government decision, read below.
The 7th Central Pay Commission (7CPC) was constituted by the Union Government in February 2014. They are the principles and structure of emoluments of all central government civilian employees including defence forces in India. The emoluments mentioned in the 7th Pay Commission include allowances such as Travel Allowance (TA), Dearness Allowance (DA), House Rent Allowance (TA), medical reimbursement, etc. The Dearness Allowance is a calculation on inflation and allowance paid to government employees, public sector employees, and pensioners in India, Bangladesh, and Pakistan.
Dearness Allowance is calculated as a percentage of an Indian citizen’s basic salary to mitigate the impact of inflation on people. DA is being increased every 6 months. but the DA stopped for 3 half years from January 2020 due to Covid 19. Before that Dearness Allowance was 17% on Basic pay or pension as the case may be and that 17 % is only being given now also. So that means for the last 3 times Dearness Allowance has not been increased.
The latest news update regarding Dearness Allowance (DA) is that the Central Government employees will not be getting Dearness Allowance till 1st July 2021. As per the 7th Central Pay Commission, a Central Government employee’s salary is divided into 3 parts which will include basic pay, allowance, and deduction. Currently, the Dearness Allowance is 17% and it is being said that it will be increased to 28% from 1st July 2021.
As Dearness Allowance increases, Travel Allowance (TA) also increases. As Dearness Allowance and Travel Allowance increases, the net CTC (Cost to Company) will increase as their share of allowance increases. The salary of the employee has to be multiplied by the fitment factor, currently, it’s 2.57, by which you get to know your net Cost to Company. Once this is done allowance found in it is added.
It is being decided that from 1st July 2021, future installments of Dearness Allowance will be released as this will increase Central Government employees’ salary. The government has clearly said that no one will receive arrears from 1st January 2020 to 30th June 2021. From 1st July 2021, dearness allowance will be benefitted by 52 lakh Central government employees and more than 60 lakh pensioners. It is noted by Central government employees and pensioners that the dearness allowance will not be increased by the government till 1st July 2021.
Presently the central government employees and pensioners are receiving dearness allowance at the rate of 17%. However, the Finance Ministry had in April 2020 decided to put on hold increment in dearness allowance (DA) for 50 lakh central government employees and 61 lakh pensioners till July 2021 due to the COVID-19 crisis.
So, if you are a Central Government employee and if you are waiting for the arrears, then it is a sad time. You have to manage within the funds available at your disposal as there will be no Dearness Allowance paid till July 2021. Stay Home and Stay Safe amidst the second wave of the pandemic.
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