In what could be uplifting news for central government employees, a significant salary hike appears to be on the horizon. Reports suggest that dearness allowance (DA) for these employees is poised to rise to 50%, resulting in a cascade effect on various other allowances and components of their salary.
DA, a crucial part of the salary structure for central government employees, is designed to counteract the impact of inflation. As per the Consumer Price Index for Industrial Workers (CPI-IW) data from the Labour Bureau, a division of the Ministry of Labour, the expected increase in DA holds the promise of a substantial overall salary increase for government employees.
The 7th Central Pay Commission has outlined specific provisions regarding how a 50% DA will impact the salary structure. According to Manmeet Kaur, Partner at Karanjawala & Co, allowances set to increase include House Rent Allowance (HRA), Children’s Education Allowance, Special Allowance for Child Care, Hostel Subsidy, TA on Transfer (Transportation of Personal Effects), Gratuity Ceiling, Dress Allowance, Mileage Allowance for Own Transport, and Daily Allowance.
How the Increase Affects House Rent Allowance (HRA):
Sanjeev Kumar, Partner at Luthra and Luthra Law Offices, provides insight into the potential HRA increase. Currently based on city types X, Y, and Z, the HRA percentages stand at 27%, 18%, and 9%, respectively. With a base pay of Rs 53,500, once DA touches 50%, the HRA will see a 25% increase from the base percentage. Consequently, revised HRA for types X, Y, and Z cities would be 30%, 20%, and 10%, respectively.
Impact on Other Allowances:
According to the 7th Pay Commission’s recommendations, various other benefits such as children’s education allowance, special allowance for child care, gratuity ceiling, dress allowance, and daily allowance will witness a 25% increase each time DA reaches 50%. Shri Venkatesh, Managing Partner at SKV Law Offices, emphasizes that these benefits, intricately tied to DA, ensure that employees can effectively cope with the escalating cost of living.
In summary, the impending rise in dearness allowance for central government employees brings with it the promise of a substantial boost in HRA and other allowances, providing much-needed relief amid the challenging economic climate.
