7th Pay Commission: 10 Major Highlights To Know

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The Union Cabinet chaired by the Prime Minister Shri Narendra Modi on Tuesday approved the recommendations of 7th Central Pay Commission (CPC) on pay and pensionary benefits. The same will be effective from June 1, 2016.

The government has also decided that arrears of pay and pensionary benefits will be paid during the current financial year itself, unlike in the past when parts of arrears were paid in the next financial year.

Here are 10 major highlights of the commission.


This move from government will benefit over 1 crore employees including 47 lakh central government employees and 53 lakh pensioners.

Pay Matrix

The present system of Pay Bands and Grade Pay has been replaced with and a new Pay Matrix as recommended by the Commission has been approved.

Salary hike

The minimum pay has been increased from Rs 7000 to 18,000 p.m. Starting salary of a newly recruited employee at lowest level will now be Rs 18,000 whereas for a freshly recruited Class I officer, it will be Rs 56,100.

Annual Increments

The rate of increment of the employee has been retained at 3 per cent.

This will benefit the employees in future on account of higher basic pay as the annual increments that they earn in future will be 2.57 times than at present.

Defence & Combined Armed Police Forces

For defence & Combined Armed Police Forces (CAPF) personnel: Gratuity ceiling is enhanced from Rs 10 to 20 lakh.

Military Service Pay

Rates of Military Service Pay revised from Rs 1000, 2000, 4200 & 6000 to 3600, 5200, 10800 & 15500 respectively for various categories of Defence Forces personnel.

House Building Advance

The Cabinet also approved the recommendation of the Commission to enhance the ceiling of House Building Advance from Rs 7.50 lakh to 25 lakh.


The Cabinet also decided to constitute two separate Committees:

(i) to suggest measures for streamlining the implementation of National Pension System (NPS) and (ii) to look into anomalies likely to arise out of implementation of the Commission's Report.

Financial impact

The additional financial impact on account of implementation of all its recommendations in 2016-17 will be Rs 1,02,100 crore.

There will be an additional implication of Rs 12,133 crore on account of payments of arrears of pay and pension for two months of 2015-16.


The Cabinet has asked Ministry of Finance to work out a customized group insurance scheme for Central Government Employees with low premium and high risk cover.

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