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.