7th Pay Commission: A four percent increase in dearness allowance (DA) and dearness relief (DR) has been announced by the central government. Additionally, it raised the House Rent Allowance (HRA) and the gratuity tax exemption maximum. Following an increase of four percent, the DA now stands at fifty percent. The question now is whether this 50% DA will increase the base wage or decrease to zero. When and how can basic pay be combined with the 50% DA? To learn more, continue reading.
When the Central Government announced a four percent increase in Dearness Allowance (DA) and Dearness Relief (DR), the Central Government received their Holi presents from their employer. A rise in the House Rent Allowance (HRA) and an increase in the gratuity tax exemption cap sweetened their agreement.
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Following a four percent increase, the DA now stands at fifty percent. Employees of the central government will start receiving their arrears on January 1. The question that arises now is whether the DA will be combined with basic pay after it reaches the 50% mark. Will it be zeroed out and refigured for the upcoming pay commission? When is the government going to be able to notify people about its merger with basic pay?
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7th Pay Commission: D A calculation to start from zero
In 2024, there’s a good chance that the maths governing central government employees’ Dearness Allowance (DA) may alter.
According to the pay commission rule, the DA is combined with the basic salary (pay) and its calculation starts at zero once it reaches the 50% limit.
However, the government has not yet announced that the DA will be combined with the base pay.
It can require more time. However, it remains to be seen if it starts the DA computations from zero for the upcoming pay commission and combines the DA with basic pay.
7th Pay Commission: When can the DA calculation change?
The government lowered the DA to zero in 2016 while enacting the 7th Pay Commission.
As per the regulations, the employees’ allowance (DA) will be eliminated when it reaches 50% and the money they were previously receiving as DA would be combined with their base income.
For example, if an employee’s base pay is Rs 20,000, they will receive a 50% increase in their DA, or Rs 10,000. In that case, the higher DA will be combined with the base pay, and the DA will be lowered to zero once more. The new basic wage for the same individual will be Rs 30,000 following the merger of the DA with the basic salary.
But in order to accomplish this, the government could also need to adjust the fitting.
7th Pay Commission: Why is DA reduced to zero?
Experts advise that, in general, employees’ 100% DA should be added to their base pay; nevertheless, this may not always be feasible.
It has, however, before combined, most recently in 2016.
When the Sixth Pay Commission was established in 2006, the Fifth Pay Commission pay scale was still in use through December at the time, with 187% of DA being awarded.
The basic salary was combined with the total DA.
As a result, 1.87 was the coefficient for the sixth pay scale.
Next, grade pay and a new pay band were established.
7th Pay Commission: Will DA become zero?
Experts predict that in July, the new DA will be determined.
Since the government only raises DA twice a year, in March of this year, clearance was granted for January 2024.
The following adjustment can now be put into effect in July 2024.
The DA may be combined and reduced to zero in such a case.
Whether the DA boost is 4%, 5%, or greater will depend on the AICPI index from January to June 2024.
The employees’ base pay will be increased by 50% of the DA as soon as this matter is resolved.
7th Pay Commission: Financial burden on government
The new pay scale was put into effect on January 1, 2006, but its notification wasn’t released until March 24, 2009, when the Sixth Pay Commission convened in 2006.
Employees of the central government received DA arrears of 39 to 42 months in three installments over three fiscal years, 2008–09, 2009–10, and 2010–11, as a result of this delay.
There was also a new wage scale developed.
A 186% DA increase was Rs 14500 in the fifth pay grade, which ranges from Rs 8000 to Rs 13500.
Thus, the total salary after adding both was Rs 22, 880.
Its corresponding pay scale was set at Rs 15600-Rs 39100 plus Rs 5400 grade in the sixth pay bracket.
This income was Rs 15600-Rs 5400 + Rs 21000 in the sixth pay grade. On January 1, 2009, the 16 percent disability allowance (Rs 2226) was added to this salary, bringing the total wage to Rs 23, 226.
The Fourth Pay Commission’s recommendations were put into practice in 1986, followed by the Fifth’s in 1996, and the Sixth’s in 2006.