7th Pay Commission New Update: DA Hike, Gratuity Up To Rs 25 Lakh Is Tax Free, HRA Increment News

7th Pay Commission New Update: The central government has increased the Dearness Allowance for the Central Government employees on Thursday 7 March 2024. Employees will get 4% extra DA in their March month salary. Apart from this, all the beneficiaries will also receive the arrears from January to March in their salary. The cabinet has approved the increment in DA for the employees in the latest cabinet meeting, so if you are also a government employee then you should check all the decisions in the cabinet meeting for Central Government employees in this article. 

7th Pay Commission New Update: 4% hike in DA

Government employees are currently receiving 46% da in their salary now the Government has increased 4% more and now all the Central Government employees we will receive 50% dearness allowance in their march month salary. Apart from this the implementation of this increment in DA will be applicable from 1 January 2024, so you will also receive the increased DA of January and February month with the salary of March. It is the 4th time when Central Government have increased 4% da continuously from previous years. As the CPI index is still increasing with the same rate so employees are receiving allowances according to the hike in inflation. The decision will not only implemented on Central Government employees but the pensioners of Central Government employees will also receive the same benefit of increment of da in their pension.

Special tax relief for Government employees

Apart from the increment of 4% da in the salary, cabinet minister Piyush Goyal has announced that the Government has also increased the tax limit for Central Government employees. Now employees will get tax exemption for the gratuity amount of a maximum of 25 lakh rupees. However, it was earlier 20 lakh, the range of gratuity amount having increased to 5 lakh, and now employees are not eligible to pay tax for a maximum 25 lakh gratuity. The gratuity amount for government employees is calculated based on their last drawn salary and years of service. As per the Payment of Gratuity Act, 1972, the gratuity is calculated at the rate of 15 days’ wages for each completed year of service, subject to a maximum limit set by the government.

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Increment in HRA

The central government have announced multiple good newses for their employees before the lok sabha election 2024 and the festival of Holi. While the cabinet has decided to increase the 4% dearness allowance and the tax exemption for 2500000 amount of gratuity, they have also announced to increase of 3% house and rent allowances for all categories including x, y, and z cities. Currently, employees are receiving 27% HRA for the X category now they will receive 30% accordingly. Employees living in the y category will receive 20% HRA while they were receiving 18% earlier and 1% increment in HRA has been announced for z category cities, so now they will receive maximum of 10% HRA with their salary. HRA stands for House Rent Allowance. It’s an allowance provided by employers to employees to help them cover the cost of renting accommodation. The amount of HRA varies depending on factors such as the employee’s salary, location, and company policies.

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The burden on central government

However, it is good news for Central Government employees but the government have to spend approximately Rs 12,868.72 crore extra to pay the increased da and other allowances to their employees. The seventh pay commission suggests to the government to increase the DA announces of Government employees 2 times a year. so the Central government is following the same guidelines and increasing da for January to June and July to December month each year. However it is also suggested by the 7th pay commission to re frame 8 Pay commission after reaching the dearness allowance of 50% of the salary. So there are high chances for the government to revise the DA allowance and start it from 0% accordingly. However, the government will also increase the basic pay of the employees before revising the percentage of da.