7th Pay Commission: Latest on DA, Gratuity and minimum pay hike for CG employees

An amendment to the bill is aimed at increasing the limit of tax free gratuity for formal sector employees to Rs 20 lakh.

The Union Cabinet after approving the 7th Pay Commission recommendations agreed to increase the dearness allowance (DA) for lakhs of Central Government employees. The hike in DA will be effective from July 1 2017 onwards and this has come as a major relief for the CG employees.

The Union Cabinet also gave its approval to the introduction of the Payment of Gratuity (Amendment) Bill, 2017, in Parliament." The next step would be the meeting of the National Anomaly Committee which is set to increase the basic minimum pay. Here are the latest updates on DA and Gratuity.

Latest on Additional DA

The Union Cabinet approved the release of additional 1% Dearness Allowance to Central Government employees and Dearness Relief to pensioners July 1 2017. The Union Cabinet chaired by the Prime Minister Narendra Modi gave its approval for the release of additional 1% Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners. It will be applicable from July 1 2017.

Latest on Additional installment of DA

The release of the additional instalment of DA represents an increase of 1% over the existing rate of 4% of the Basic Pay/Pension, to compensate for price rise. This increase is in accordance with the accepted formula, which is based on the recommendations of the pay panel. The combined impact on the exchequer on account of both DA and DR would be Rs.3068.26 crore per annum and Rs.2045.50 crore in the financial year 2017-18 (for a period of 8 months from July, 2017 to February, 2018). This will benefit about 49.26 lakh Central Government employees and 61.17 lakh pensioners.

Latest on Gratuity amendment bill

An amendment to the bill is aimed at increasing the limit of tax free gratuity for formal sector employees to Rs 20 lakh. The Union Cabinet agreed to table the Payment of Gratuity (Amendment) Bill, 2017 in Parliament. The Union Government is of the view that the entitlement of gratuity should be revised for employees who are covered under the Payment of Gratuity Act, 1972, on account of inflation and increase in salaries of employees working in the private sector. The main factor behind this Act is to ensure social security of salaried employees after retirement, irrespective of the fact whether it is because of rules of superannuation, or physical disablement or impairment of vital parts of the body.

7th Pay Commission, latest on minimum pay hike

The government had first approved the minimum pay hike of Rs 18,000 as per the recommendations of the 7th Pay Commission. However it later clarified that this is variable in nature. Now the matter is before the National Anomaly Committee. A majority vote to hike the basic minimum pay from Rs 18,000 to Rs 21,000 is round the corner.

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