7th Pay Commission: Allowances to be taxed, no minimum pay raise, bad year for central govt employee

7th Pay Commission: Allowances to be taxed, no minimum pay raise, bad year for central govt employee

There will be no minimum pay increase and allowances will be taxed under the 7th Pay Commission. It has not been a good year for central government employees who have been receiving one bad news after the other.

Employee unions have been demanding that the minimum pay be hiked from Rs 18,000 to Rs 26,000. The government had earlier assured to look into this issue. Moreover the allowances will also be taxed the government has decided. Let us take a look at what the central government employees can expect.

Allowances to come under Income Tax ambit Senior finance ministry officials have said that the new allowances would come under the ambit of income tax. Income tax will be imposed on the allowances which were granted from the financial year 2017-18. The tax treatment on basic salary, bonus and allowances for both government and non-government employees was proposed in the Finance Bill 2017. The government felt that if all allowances excluding basic salary of central government employees are made tax free, it would be discriminatory to others. 

No increase in minimum pay There were discussions about hiking the pay by the National Anomaly Committee. The committee was looking into the issue. The government has however decided not to go ahead with the demand. There is no scope for change, the government has decided. Despite efforts by employee unions, the government has decided that the minimum pay would stay at Rs 18,000. The matter is before the committee. It has been sought that the pay be hiked from Rs 18,000 to Rs 26,000. Even if the committee were to consider the same, the government says that there is no scope for any change.

No exemption from tax says government Central government employees had demanded an exemption from income tax on new allowances. The employees had also demanded that the allowances come into effect with arrears starting July 2016. However the Union Cabinet last month implemented the 7th Pay Commission recommendations and said that the allowances would come into effect from July 2017 onwards, much to the dismay of the central government employees.

One bad news after another Employees of the Public Sector Units too had made a similar demand. They too had been demanding that their pay is hiked to Rs 26,000. However the government has made it clear it will not be likened to the one that the central government employees are getting. Finance Minister of India, Arun Jaitley had said after the 7th Pay Commission recommendations were cleared that salaries for central government employees have to be respectable when compared to the ones in the private sector. However employees feel cheated and frustrated as their demand for arrears on allowances from July 2016 was not met. 

OneIndia News