After waiting for more than a year, the central government employees and pensioners will have something to cheer about but they need to know the nitty gritty of increased salary.
The CPC fitment factor in the 7th Pay Commission primarily decided the salary of the government employees and since the fitment factor has increased, the minimum salary has also increased and it rose by 2.5 times.
Currently, the fitment factor of central employees stands at 2.57. The basic salary is calculated by multiplying it by 2.57 which is in addition to allowances like Dearness Allowance (DA), Traveling Allowance (TA), House Rent Allowance (HRA).
For instance, if a person’s basic salary is Rs 18,000, then his salary would be 18,000x 2.57= Rs 46,260 which will be without allowances.
Besides the fixed salary, the allowances like DA, TA, HRA, medical reimbursement are decided and DA is given twice a year which is from January to June and then from July to December.
DA is decided on the basis of average inflation in 6 months. As per the AICPI, the average inflation rate for July-December 2020 was 3.5 percent and therefore the DA for January to June 2021 would be at least 4 percent.
After the announcement of DA, there is an increase in TA which follows the same pattern and increase in DA is linked between the two.
Besides the hike in Dearness Allowance from July 1, the EPF and gratuity will also increase and EPF is 12 percent of basic salary and dearness allowance.