With so much discussion around the 6th Pay Commission report and implementation - I thought of sharing some highlights of the sixth CPC report and how it actually makes a difference to your monthly salaries and the taxes.
Most of the central government employees are very eager to know the new salary details and have been using the new Salary Calculator to compute their new salaries.
Other highlights of the Pay commission report and how the states and different sectors are interpreting and implementing
Big raise on cards for university teachers.
Judge’s Salary set to go up Three-Fold.
30-50% hike for Rajasthan state staff.
Orissa sets up panel to study Sixth Pay Commission report.
Rajasthan Govt to take up Pay Commission proposal next week.
Pondicherry to seek grants from Centre.
Madhya Pradesh Govt to implement Sixth Pay Commission from Sept 1.
Group `D` staff may not require to pay tax on Arrears.
Working Mothers get a well-deserved break.
How this Sixth Pay Commission change your take home salary and the taxes that you pay - read below
1. Full pension only after 20 years: You are entitled to full pension after completing 20 years of service. This offer is really attractive to those government employees who joined at an early age and now want to enter the private sector. Pension will act as a cushion after they give up the secure government job. The government has tried to attract young talent by incorporating this flexibility.
2. Gratuity limit enhanced: Gratuity cap has been raised to Rs 10.00 lakhs from the present Rs 3.5 lakhs – a cool jump of approximately 300 percent! Of course gratuity is a function of the service put in by the employee and the last salary drawn. But it will provide adequate relief to employees retiring in the near future in the context of the scorching inflation of over 12 percent ruling for sometime now. They can invest this lump sum in any bank and generate over 10 percent by way of interest. It is a double bonanza for those on the verge of becoming senior citizens.
3. Enhanced pension cap and floor limit: Government has raised the minimum pension of its employees from Rs 2,813/- to Rs 4,060/-. The upper ceiling has been raised to Rs 52,200/- from Rs 33,075/- at present. So the cap has been raised by a whopping 58 percent while the floor (minimum) has been raised by an impressive 44 percent. So employees in the higher salary bracket will benefit more when they retire.
4. Live long and enjoy more: A new and unique dimension has been added to the new pension scheme. If you remain healthy post-retirement and hence live longer, your pension will increase proportionately. So once you turn 80, your pension will rise by 20 percent; similarly if you turn 85, your pension will rise by 30 percent; each additional five years there from will entitle you to a rise of over 10 percent.
5. Arrears will not be taxed in the same year: Some confusion prevails with regard to computation of income tax in respect of arrears. Arrears would be released in two installments of 40 percent and 60 percent in two financial years, viz., 2008-09 and 2009-10. Earlier it was reported that even though the arrears would be released in two installments, the employee should reckon the arrears fully as income in financial year 2008-09.
It spoiled the employees’ party since most of the first installment of arrears released would have been gobbled up by the taxman this year. But the Finance Minister has reportedly clarified that only the arrears released this year, viz., 40 percent will be taxed.
6. Benefits enhanced if employees dies while on duty: Ex gratia paid to the family of an employee killed in terrorist attacks or attacks by anti-social elements has been enhanced to Rs 10.00 lakhs. The family will be paid Rs 15.00 lakhs by way of ex-gratia if the employee dies fighting a war or battling militants or working at high altitudes characterized by hostile weather.
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