INVC NEWS
New Delhi : Central employees and pensioners might soon witness a welcome change with a proposed 4% increase in DA and DR. Learn more about how this could boost salaries and the likelihood of a 3% rise in HRA, making rented accommodations more affordable.
Introduction
In this comprehensive article, we will provide you with the latest update on the 8th Pay Commission and the Government of India’s plan regarding Dearness Allowance (DA) for central employees and Dearness Relief (DR) for pensioners. We’ll delve into the potential hike in DA and DR, its implications on salaries, and the possibility of an increase in House Rent Allowance (HRA). So, let’s get started!
Government’s Plan for Dearness Allowance and Dearness Relief
According to credible reports, the Government of India is considering a significant hike in both Dearness Allowance (DA) for central employees and Dearness Relief (DR) for pensioners. The proposed increase is set at 4 per cent, which will raise the current DA from 42 per cent to 46 per cent. This translates to a substantial boost in the salaries of approximately 1 crore employees and retired individuals across the country.
Impact on Salaries
With the 4 per cent increase in DA, employees can expect a minimum salary increment of 2000 rupees. To understand this better, let’s take an example. Suppose an employee’s basic pay is Rs 18,000; with the current DA at 42 per cent, they receive Rs 7,560 as DA. However, with the proposed 46 per cent DA, they will now receive Rs 8,280 per month as DA.
Thus, the monthly salary will witness an increase of Rs 720. For an individual with a salary of Rs 56,900, the monthly allowance will rise by Rs 2,276, resulting in an annual increase of Rs 27,312.
Potential Increase in House Rent Allowance (HRA)
Alongside the dearness allowance, the government is also considering a possible increase in House Rent Allowance (HRA). The last HRA hike occurred in July 2021, with a 25 per cent increase. This time, the government might raise it by 3 per cent.
Clarification on 8th Pay Commission
There has been speculation regarding the establishment of an Eighth Pay Commission for central government employees. However, on Tuesday, July 25, the government clarified in the Rajya Sabha that no such proposal is under consideration. Minister of State for Finance, Pankaj Chowdhary, confirmed this in a written reply in the Rajya Sabha.
Understanding Dearness Allowance (DA) and House Rent Allowance (HRA)
To provide further clarity, let’s delve into the concepts of Dearness Allowance (DA) and House Rent Allowance (HRA).
Dearness Allowance (DA)
Dearness Allowance is an essential component of an employee’s salary package. The government grants DA to its employees and pensioners to offset the impact of inflation. It is typically calculated as a percentage of the individual’s basic pay, ensuring their purchasing power is not eroded by rising prices. Furthermore, while filing Income Tax Returns (ITR), it is mandatory to declare the tax liability relating to DA.
House Rent Allowance (HRA)
House Rent Allowance, commonly known as HRA, forms a crucial part of an employee’s salary, particularly for those residing in rented accommodations. Employers provide HRA to assist employees in meeting the expenses incurred for their rented houses. If you are living in a rented house, you can claim HRA exemption under section 10(13A) read with rule 2A of the Income Tax Act, 1961.
Conclusion
In conclusion, the 8th Pay Commission update brings potential good news for central employees and pensioners. The proposed 4 per cent hike in Dearness Allowance (DA) and Dearness Relief (DR) can have a positive impact on the salaries of millions of individuals. Additionally, the possibility of an increase in House Rent Allowance (HRA) may further alleviate financial burdens for those living in rented accommodations.
As we eagerly await the official announcement from the government, it’s essential to stay informed about these updates to make well-informed decisions. We hope this article has provided you with valuable insights into the latest developments surrounding the 8th Pay Commission and its potential impact on the lives of central employees and pensioners.
