Group D employees’ earning from 6th Pay Commission to be tax exempt

Group D employees’ earning from 6th Pay Commission to be tax exempt

Khabrein.Info News Desk,

New Delhi, Sept 7, 2008: There is good news for group D employees. Their earning from 6th Pay Commission arrears may be tax exempt.

This may be the biggest news for the central government’s group D employees as it will give them substantial savings that they could not have managed from anything else.

There were already fears that the government may tax their earnings from sixth pay commission arrears 100 percent from the 40 percent arrears they were being paid this year.

This could have left many central government employees without much cash from the arrears they were being paid.

Though the government later denied but the fear is still looming as no clear instructions have been issued in this regard.

The government has given hefty rise to central government employees, around 25 percent and the lowest government employee will be taking away at least more than Rs 10000 as monthly salary.

The good news here is limited to only group D employees. High ranking officials would not get as much benefit as their Group 'D' counterparts get as they already are in a larger tax bracket and may also be required to pay a "surcharge" on their salaries.

The government had divided arrears in two installments with central government employees getting 40 percent amount of the arrears this year and the rest 60 percent next year.


Sources in the finance ministry say that the ministry may not deviate from the general practice where tax is charged only on an income from that year and not what he would get next year.

Government instructions issued on August 30, 2008, regarding fixation of pay and payment arrears consequent to implementation of the Sixth Central Pay Commission recommendations clearly states that in authorising the arrears income tax as due may also be deducted and credited to the government. The arrears with effect from January 2006 would cost Rs 29,373 crore. Of the arrears, 40 per cent would be paid during the current year to the 50 lakh employees of the central government.

Had the government decided to go this way it would have wiped out almost the entire amount of 40% arrears to be paid to central government employees this year. Senior bureaucrats will suffer the most as their tax would be topped with a surcharge of 10%, applicable on an income of Rs 10 lakh and above.

The financial implication of Pay Commission on the General Budget would be Rs 15,717 crore and Rs 6414 crore on Railway Budget in 2008-09. The government’s present salary bill is over Rs 70,000 crore and the pension bill is over Rs 30,000 crore.


Source: http://www.khabrein.info/