Cabinet approves Increase in Dearness Allowance for CG Employees from July-2010

As expected, the Union Cabinet approved the proposal to enhance Dearness Allowance (DA) from existing 35% to 45% with effect from 1st July-2010.

Consequent on this approval a net increase of 10% in the Dearness Allowance is to be allowed by Government to all Central Government Employees and Pensioners including Family Pensioners.

Once the order to this effect is issued by Government DA arrears from July-2010 and prospective DA increase will be sanctioned by Administration.

You may recollect that we predicted the tentative DA eligibility with effect from 1st July 2010 as 45% i.e an increase of 10%, based on CPI-IW (Consumer Price Index-Industrial Workers) base year 2001=100 for the months from July-2019 to June-2010. 

Check the previous article of GConnect on tentative DA with effect from July-2010.

Check here to know the method to calculate Dearness Allowance using CPI-IW (Consumer Price Index-Industrial Workers).

Modified Flexible Complementing Scheme for Scientists

A Flexible Complementing Scheme (FCS) for scientists is in position in some of the scientific Ministries /  Departments of the Government of lndia and the same is presently governed by the guidelines issued by this Department under O.M. No.2141197-PIC dated the 9th November, 1998.

There is also in position a separate, merit based promotion scheme in the DRDO and the Departments of Atomic Energy and Space. The Sixth Central Pay Commission (6th CPC) has examined these schemes in detail and observed that various time-bound promotion schemes may be necessary for scientific organizations as the morale of the scientists has to be kept high in order to keep them motivated and to stop the flight of talent from Government organizations involved in research and scientific activities.

In this context, the 6th CPC has recommended that the existing scheme of FCS with necessary modifications has to be continued for RBD professionals in all SBT organizations, and the merit based promotion scheme in the Departments of Atomic Energy, Space and DRDO would also need to be persisted with.

The Commission has, however, recommended certain features to be incorporated in the existing schemes of FCS and merit based promotion scheme so as to make them more relevant to the context.

The recommendations of the Commission have been examined in detail by Government in the context of FCS and a revised comprehensive scheme is announced by Government for immediate necessary action by all concerned Ministries and Departments.   Assessment of Scientists from 01 .01.2011 is to be carried out as per new scheme.

MACPS – Further Clarification by DOPT

Department of Personnel and Training has issued clarifications on Modified Assured Career Progression Scheme (MACPS), consequent upon, clarifications have been sought by various MinistrieslDepartments about certain issues in connection with implementation of the MACPS. The doubts raised by varlous quarters have been duly examined and point-wise clarifications have accordingly been indicated in the Annexure to DOPT OM No 35034/3/2008-Estt (D) dated 09-09-2010




For more details download this DOPT Clarification Office Memorandum No 35034/3/2008-Estt (D) dated 09-09-2010

Cabinet’s nod for raise in IT Exemption Limit

The Cabinet on 26th Aug-2010, approved Direct Taxes Code (DTC) Bill, clearing decks for tabling the legislation in the Monsoon Session of Parliament so that the new Act ushering in reduced tax rates and exemptions may come into effect from next fiscal.




The new DTC bill proposes to raise exemption limit for personal income tax from Rs. 1.6 lakh to Rs. 2 lakh. The bill also proposes income tax for Rs. 2- Rs. 5 lakh slab to be 10 per cent, and 20 per cent on income up to Rs. 5 – Rs. 10 lakh, and 30 per cent on income beyond that.



The code aims at reducing tax rates, but expanding the tax base by minimising exemptions. When enacted, DTC will replace the archaic Income Tax Act and simplify the whole direct tax regime in the country.



The Finance Ministry had earlier come out with a draft on the DTC bill, some of whose provisions drew strong criticism from industry as well as the public.



To address those issues, the ministry brought out the revised draft, dropping earlier proposals of taxing provident funds on withdrawal and levying Minimum Alternate Tax on corporates based on their assets.



As of now, it is proposed to provide the EEE (Exempt- Exempt-Exempt) method of taxation for Government Provident Fund (GPF), Public Provident Fund (PPF) and Recognised Provident Funds (RPF).



The revised draft also puts pensions administered by the interim regulator PFRDA, including pension of government employees who were recruited since January 2004, under EEE treatment.



Under the EEE mode, the tax exemption is enjoyed at all the three stages–investment, accumulation and withdrawal.



The revised proposal has also made it clear that tax incentives on housing loans will continue. Payment on interest on housing loans up to Rs. 1.5 lakh will continue.



Once this bill cleared by Parliament Direct Tax Code will be a full-fledged Direct Tax law in India which will take effect from financial year 2011-12 (Assessment Year 2012-13)



Tax Structure proposed in the DTC Bill is as follows



Salaried persons exempt up to Rs. 2 lakh

Senior citizen upto Rs. 2.5 lakh exempt

Tax for those earning Rs. 2 – 5 lakh at 10 per cent

Tax for those earning Rs. 5-10 lakhs at 20 per cent

Tax for those earning Over Rs. 10 lakhs at 30 per cent.

Tentative DA eligibility w.e.f 1st July-2010

Monthly All India Consumer Price Index for Industrial Workers (Base year 2001=100), shortly known as CPI-IW has been announced by the Government for the month of June-2010 today.

As per this announcement made by Labour Bureau, Government of India, Government of India, CPI-IW has increased from 172 (for the month of May-2010) to 174 for the month of June-2010. (Base 2001=100)

Check this Labour Bureau, Government of India website for more details.

CPI-IW for the month of June-2010 is significant for Central Government employees as it culminates the 6 months cycle for calculation of effective Dearness Allowance with effect from 1st July 2010.

If you want to calculate Dearness Allowance with effect from July-2010, get the average of monthly All India Consumer Price Index (IW) with the base year 2001=100 for the preceding 12 months and apply the same in the following formula

Dearness Allowance = (Avg of AICPI for the past 12 months – 115.76)*100/115.76

You don’t need to break your head much in this arithmetic as we have an online tool to calculate the DA, given the index for the preceding 12 months.

Proceed from here to GConnect online DA calculation tool

Based on this calculation the Dearness Allowance eligibility with effect from 1st July 2010 works out to 45% i.e., an increase of 10% from the present DA of 35% with effect from 1st Jan 2010.

Also check this previous GConnect article for detailed study on Central Government Employees Dearness Allowance Calculation based on CPI-IW

Please note that this is only attempt to estimate Dearness Allowance w.e.f July-2010 using the method adopted by Government for calculation of DA in the past. DA with effect from 1st July 2010 is yet to be announced by the Government.

PFRDA’s Plea for tax relief for investment in NPS

The interim pension regulator has sought tax relief on investments in the New Pension Scheme (NPS) to make it more attractive to employees of private sector firms.

The Pension Fund Regulatory and Development Authority (PFRDA) has written to the finance ministry seeking level playing field for NPS with other long-term savings schemes that will get tax benefits under the proposed Direct Taxes Code. “All we want is equal treatment,” a PFRDA official said.

NPS is currently under the Exempt-Exempt-Tax system, which means investment will be taxed when it is withdrawn. Provident fund and many of the small savings schemes are under the Exempt-Exempt-Exempt (EEE) regime, and are not taxed at any point.

“If the finance ministry plans to continue with the EEE regime for long-term saving schemes, we want the NPS also to get the same treatment,” the official said, requesting anonymity. “Several multinational companies are talking to us. We need more clarity on the tax treatment,” he said.

The pension regulator has, in its letter to the central board of direct taxes (CBDT), said tax benefits will make the scheme more attractive and will help increase its share.

While a few public sector units such as Nalco and Damodar Valley Corporation have already transferred a portion of their superannuation funds to the NPS, manyprivate sector companies and public sector banks are also exploring the option as it would rid them of the headache of administering and managing the funds.

“This would be a good step. It would allow private companies to move their superannuation funds to the NPS,” said Amit Gopal, vice-president of pension consultant India Life Capital.

The PFRDA has further requested for an additional window under Section 80C of the Income Tax Act for contributions by subscribers’ employers.

Investments in specified schemes up to Rs 1 lakh are exempt under Section 80 C of the Income Tax Act. The budget for this year has given an additional exemption of Rs 20,000 for investments in infrastructure schemes.

Under Indian laws, companies with over 100 employees have to contribute 12% of an employee’s salary to the provident fund with an equal contribution from the employer.

The NPS, a defined contribution superannuation scheme for government employees, was thrown open to the private sector in May last year. The scheme offers subscribers the flexibility to decide their investment portfolio as well as choose between fund managers.

With weighted returns of over 12% annually, NPS is expected to be the ideal long-term saving instrument for workers in the unorganised sector. Its low fund management fees of 0.009% make it attractive.

The scheme, however, has managed only 6,500 private subscribers, partly because it does not enjoy some tax benefits given to private provident fund and private superannuation funds.

Source: The economic Times

Increment in case of promotion to same grade pay

Mr.S. K. Pandey of ITAT asked:

Kindly suggest me whether an employee will get one promotional increment after promotion in 2009 when there is no change in his pay band and grade pay.

Also please suggest the pay band of an working employee in lower scale, who has passed UPSC Exam and joined as Assistant Registrar in ITAT in pre-revised scale 6500-10500, which was upgraded 8000-13500 later on. Is he eligible for PB-3 with Grade Pay 5400? Or should he be fixed in PB-2 only with grade pay 5400?

Also please suggest the pay band of an employee who was working in lower scale and promoted as Assistant Registrar in ITAT in pre-revised scale 6500-10500 which was upgraded 8000-13500 later on. Is he eligible for PB-3 with Grade Pay 5400? Or should he be fixed in PB-2 only with grade pay 5400?

Opinion:

As far as we interepret the Rule 13 read with Clarificatory OM dated 13/09/08 you are eligible to get 3% increment on your promotion (please go through Gconnect guest article Promotion is it honorary?

This has further been established from a reply under RTI. This is the gist of the query raised in RTI

“ It may be clarified whether on their promotion even though they are in the same pay band i.e 9300-34800(PB2) and same grade pay i.e 4200 as to whether any monetary benefit is to be given or not i.e 3% increment”.
Reply received: “Due to same grade pay in the grade STA(5000),DOS(5500) & AO, the pay is required to be fixed in terms of Dept. of Expenditure’s OM F. No. 1/1/2008-IC dated 13/09/2008.” (This OM is available in the article : Promotion is it honorary?

But this issue is yet to resolved by the respective administration.

One of the remedies available to the employee is to make categorical RTI question to 6CPC Implementaion Cell or DOPT seeking clarification.

Reply for point No: 2 and 3:

If the post of Assistant Registrar in ITAT is a Group A entry cadre, the up gradation promotion fixation should be given in PB 3 + grade pay of 5400. If not so, fixation is should be in PB2 + grade pay of 5400.

LATEST NEWS ON JCM meeting on 6TH CPC

These are various issues discussed in first meeting of Joint Committee of MACPS held on 25.05.2010. This committee was formed by the Government recently to examine anomalies in Modified Assured Career Progression Scheme implemented consequent on implementation of pay commission with effect from 1.9.2008

Provide Grade Pay of the next promotional post under MACP:

Staff Side pressed for placement in the Grade Pay of the Promotional Post instead of next higher Grade Pay in the hierarchy of revised Pay Band and Grade Pay. It was insisted because the career progression only means the promotion in the hierarchy and not to a Grade Pay which is not present in the hierarchy of the respective department.

The Staff Side also gave an alternative that first two MACPs after 10 and 20 years should be to the next promotional post as per the hierarchy of respective department as under the erstwhile ACP scheme and thereafter the third MACP in the next Grade Pay of the Revised Pay Band and Grade Pay.

Date of Effect:

It was demanded that MACP scheme may be introduced with effect from 1.1.2006. A scheme which has been recommended by the 6th CPC will be not available to those employees who have opted for revised pay scales w.e.f. 1.1.2006 but had retired or died before 1.9.2008, which is very anomalous.

Option for earlier ACP Scheme:

Staff Side pointed out that the benefit which employees were getting through two ACPs after 12 and 24 years of service is much higher than the benefit that they will get under MACP after three financial upgradations. It was therefore urged that the service conditions which were available to the existing employees cannot be adverselyrevised and if that happens then an option to retain the old scheme is inherent. And if the present MACP is not converted to hierarchical pattern, then at least an option may be given to retain the erstwhilescheme of ACP.

Grant of financial upgradation between 1.1.2006 and 31.8.2008:

In Para 9 of the DOPT OM dated 19.5.2009, it had been provided that earlier ACP scheme will continue to operate for the period from 1.1.2006 to 31.8.2008. However, this is not being allowed to officials who have opted forrevised Pay Band and Grade Pay with effect from 1.1.2006. In some offices, it is being insisted that financial upgradation under the earlier ACP would be granted only in the pre-revised pay scales and they will have to opt for the revised pay scales only from the date they are granted the financial upgradation under earlier ACP. It was demanded that earlier ACP benefit may be given also to those officials who have come over to theRevised Pay Band and Grade Pay with effect from 1.1.2006.

Anomaly on introduction of MACP Scheme:

By an illustration in respect of Junior Engineer of CPWD, it has been pointed out that under earlier ACP they will go up to the revised Pay Band 3 with Grade Pay of 6600/- on completion of 24 years of service, whereas under the MACP Scheme, even after 30 years of service and getting third MACP they will get the Grade Pay of 5400/- only in PB-2. This is obviously less advantageous and therefore the demand for option to retain the old ACP scheme has been insisted. The Official Side indicated that they will consider all these demands and in the next meeting they will indicate how far they can go.

Applicability of MACP Scheme to Group D employees who have been placed in the Grade Pay of 1800/-:

The DOPT had already stated that all promotions and upgradations granted under ACP Scheme of 1999 in the post of four pay scales S-1, S-2, S-3 and S-4 shall be ignored for the purpose of MACP. In other words all the three MACP will be available to all the Group D employees who have since been placed inthe grade pay of 1800/-. If an employee has completed 10 years of service he should be granted the GP of 1900/-; if completed 20 years of service he should be granted the GP of 2000/-; and if he has completed 30 years of service he should be placed in the GP of 2400/-. In some departments these MACP has not been granted to the Group D employees. The staff side therefore insisted an enabling clarificatory instructions may be issued. The Official Side agreed to issue such clarificatory instructions.

Counting 50% of service rendered by Temporary Status CLs for reckoning 10,20, and 30 years of service under MACP scheme:

It was pointed out that the Railways have already issued orders for counting 50% of service rendered by Temporary Status Casual labourers for reckoning 12 and 24years of service under the old ACP scheme . It was also pointed out that Courts have also ordered that total service rendered as TS CLs may be counted for the purpose of ACP. The Official Side wereof the opinion that 50% of service rendered by TS CLs has been counted only for the purpose of pension. The Staff Side pointed out that the TS CLs have been granted all the facilities admissible to a Temporary Employee in respect of leave, increment, pay scale etc and therefore this may be deemed as a regular service for the purpose of MACP also as has been done by the Railways. The Official Side wanted the orderof the Railway Department regarding ACP and the Orders of the Courts for their examination.

Supervised staff placed in higher Grade Pay than that of the supervisor:

The Staff Side suggested that this item may be transferred to National Anomaly Committee item and discussed there. This has been agreed to.

Other issues:

There are 23 more items which have been suggested by the Staff Side leaders of Railways. It was pointed out that leaders of other departments may also suggest many other anomalies related to MACP.The Staff Side stated that as and when these additional items are received they may be included in the Agenda for discussion in the subsequent meetings. The Official Side agreed to.

Source: Confederation Of Central Government Employees

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