With the implementation of the 7th CPC (Central Pay Commission) in 2016, it was ensured that a central government employee's minimum wage would not be less than 50% of net salary. The rate of annual increment is being kept at 3%, as recommended by the seventh pay commission. When it comes to calculating a central government servant's (CGS) monthly salary, the 7th CPC fitment factor comes into effect, which results in salary calculation. Fitment factor was among the most addressed concerns among central government employees following the introduction of the 7th CPC (Central Pay Commission). According to the guidelines of the Seventh Pay Commission, a central government employee's salary, without allowance, is determined by his or her basic salary and fitment factor.
The fitment factor is 2.57, according to the 7th CPC guidelines. Apart from allowances like Dearness Allowance (DA), Travel Allowance (TA), House Rent Allowance (HRA), and so on., a central government employee's basic salary is calculated by the 7th CPC fitment factor i.e. 2.57. For instance, if a central government employee's basic salary is Rs 30,000, then his or her basic pay will be Rs 77,100.
7th Pay Commission Allowance
A central government employee's monthly salary, without allowances, is calculated once. There are also multiple allowances such as DA, TA, HRA, medical coverage, among others. It is announced twice a year, once in January and then in July and December. The centre makes an estimation of inflation hike during the first six months of the year and for the next six months of the year before declaring DA. They declare the closest round number as DA hike, which is higher than the average inflation rate. For the duration of July to December 2020, average inflation is currently about 3.5 percent (according to the AICPI). There are also numerous other allowances such as TA, HRA, medical reimbursement, and so on. A central government employee's monthly salary is calculated by adding all of these allowances and multiplying by the fitment factor and basic salary. A central government employee's net salary is typically double the basic salary calculated by the fitment factor.
PF and gratuity contribution
Now comes the deductible part, which includes monthly Provident Fund (PF) contributions, gratuity contributions, and so on. Due to the fact that PF and gratuity contributions are added to basic salary and DA. Following the end of all deductibles, the net monthly salary is calculated by subtracting the PF, Gratuity, and other monthly contributions from one's gross CTC. The monthly take-home salary of a central government employee is determined after this deduction.