7th Pay Commission: Know the impact of DA restoration on the 7th CPC pay matrix

The ministry has stated that central government employees' Dearness Allowance (DA) and central government pensioners' Dearness Relief (DR) will be reinstated on July 1. That being said, the settlement of DA and DR arrears with effect from January 1 are pending. It is worth noting that the Centre halted the DA and DR of central government employees and retirees last year due to the Covid-19 epidemic. The proposed conference between the CGS representative authority, the National Council of JCM, and central government authorities on May 8, 2021, was suspended owing to the Covid-19 epidemic, and a new date has not been set.

According to sources from the Finance Ministry, the Centre is expected to start paying the dearness allowance (DA) to central government employees prospectively from July 1, 2021, instead of retrospectively with arrears. But central government employees are still unsure if they will get their DA arrears. Currently, three DA instalments are pending: 4% from January 1, 2020 to June 30, 2020, 7% (4 per cent plus 3% from July 1, 2020) from July 1, 2020 to December 31, 2020, and 11% (7 per cent +4% from January 1, 2021) from January 1, 2021 to June 30, 2021. Let's look at the following math to determine how much an employee would miss if they don't get their arrears.

The minimum Grade Pay of a Level-1 employee under the 7th CPC is Rs 1800, and his basic salary varies from Rs 18,000 to Rs 56,900. The minimum arrear that a Level-1 employee will receive is Rs 23,760, which is 4 per cent of Rs 18,000 for 6 months plus 7 per cent of Rs 18,000 for 6 months plus 11 per cent of Rs 18,000 for 6 months. Likewise, if a Level-1 employee's basic salary is Rs 56,900, the total arrears will be Rs 75,108, which is equal to 4% of Rs 56,900 for 6 months plus 7% of Rs 56,900 for 6 months plus 11% of Rs 56,900 for 6 months. A central government employee's DA arrears range from Rs 23,760 to Rs 56,900 on the Level-1 7th pay commission pay scale, according to the source Times Now.

Role of 7th pay fitment factor

As per the 7th CPC fitment factor, a central government employee's 7th CPC pay matrix and 7th CPC salary will be determined based on the below formula, in which one's DA and 7th CPC basic pay also play a significant part. A central government employee's DA is likely to increase from the current 17 per cent to at least 28 per cent if the DA is restored. If we consider the 7th CPC fitment factor, which was set at 2.57 when the seventh pay commission was implemented, an employee's monthly basic salary and monthly contributions such as Provident Fund (PF), gratuity, and so on are likely to increase. As a result, by multiplying the monthly basic salary by the fitment factor, the seventh pay commission fitment factor will specify the monthly basic salary.

If a government employee's monthly basic income is Rs 25,000, for example, his or her monthly basic pay will be Rs 64,250. (Rs 25,000 x 2.57). The allowances, such as DA, TA, and medical reimbursement, will be determined following that. The gross monthly salary of an employee is determined by the person's basic monthly salary and overall allowance. The monthly PF is determined considering one's basic pay + DA. For example, if DA increases, one's PF contribution will increase, resulting in a significant retirement corpus for a central government employee. As a result, deductions such as monthly PF contributions, income tax at source, and so on will be applied, and the gross monthly amount or net take-home salary of a central government employee will be determined.

Note: The above calculations have been taken only as an example basis and may vary according to one's salary.