Important News: Employees will get 30 percent fitment benefit in salary, government also increases the age of retirement

The Telangana government has given great relief to millions of employees and teachers. Chief Minister K Chandrasekhar Rao has announced an increase in salary with a 30 percent fitment. At the same time, the age of retirement has been increased from 58 to 61. CM Rao said that this would benefit about 9.17 lakh employees and pensioners in the state. It also includes outsourcing and contract employees. Everyone’s salary will increase from April 1, 2021. He said that I am happy to announce that the salary of all employees and teachers will be increased by 30 percent. This order will be effective from 1 April 2021.

Chief Minister Chandrashekhar said, “Corona virus infection has had a profound impact on the state’s economy.” The 11th wage review has been delayed due to an unprecedented increase in the fiscal deficit. The Finance Ministry has said that the Central Government employees will get relief in DA and by July 1, 2021, the three installments which were on hold will be released. Last year, central government employees were excluded from the DA due to the COVID-19 epidemic. Meanwhile, the Labor Minister, Santosh Gangwar, reacted to work three days and four days a week. During a session in the Lok Sabha, he gave in writing that the government had no plans to implement this system.

Holi Bonus for Government Employees by Center, States

In what can be considered as a Holi gift for government employees, the central government will provide Rs 10,000 in advance under the special festival allowance scheme. The scheme will be available till 31 March. In particular, the festival advance scheme was not in force when the 7th Pay Commission was to be implemented. Apart from the Center, many state governments are providing Holi gifts for government employees. As soon as the festival of colors arrives, here we have brought for you a list of the states that have given benefits to the employees before Holi:

Madhya Pradesh

The state government has planned to vacate 75 percent of the third installment of arrears as per the 7th Pay Commission before Holi. Well, this decision is not final yet as the authorities are waiting for the necessary paperwork to be completed.

Telangana

The state government has announced a 30 percent hike in the salaries of government employees. Also, the retirement age of employees has been increased to 61 years.

Tripura

The state government has announced an increase in DA (dearness allowance) for government employees. Not only this, pensioners have also been given a 3% increase in DA.

These employees are most likely to benefit from the new pay code

According to the Wage Code, 2019, the basic salary of an employee should be 50 percent of the total CTC. Know which employees will benefit the most from the implementation of the new pay code. The government may soon notify the new wage code rules that will change the pay structure for a large number of employees in the country. According to the Wages Code, 2019, the basic salary of an employee should be 50 percent of the total salary or cost-to-company (CTC). Currently, most companies pay a lower percentage of basic allowances to employees, while the number of allowances is higher. However, this will change as soon as the new pay code comes into force. Some reports indicate that the new pay code will come into force from April, but the government has not officially announced it yet. Last month, it was reported that the government was working to notify it soon.

This effect on salary due to the implementation of new pay code

When the new pay code comes into force, employers are required to pay at least 50 percent of the employee’s CTC as base salary. As the basic salary of the employees will be half of the CTC, contribution towards other components like provident fund and gratuity will also increase. It may be noted that both provident fund and gratuity contributions are calculated on the basic salary. Most employees may see a reduction in their house-to-house salary based on the base salary. Also, their retirement benefits will be higher as a monthly contribution towards provident fund and monthly gratuity will increase. It is worth noting that the CTC of employees depends on certain factors – basic salary, house rent allowance or HRA, retirement benefits (PF, gratuity and more) and some tax-friendly allowances such as LTC and entertainment allowance. When the new pay code rule comes into force, companies must ensure that the components that make up the CTC – excluding the base salary – do not exceed 50 percent. And the other half should have a basic salary. This may cause companies to cut some exit allowances, which are usually higher.

What will be the benefit from this?

All employees will benefit from this move as their retirement benefits will be higher after the wage code is notified due to higher contribution towards PF and gratuity. At the same time, the salary of the monthly house-allowance of the employees will be submerged. The dip will be modest for low and middle income people. However, higher incomes may feel a big pinch after the new pay rules are notified. Simply put, higher PF contribution will lead to lower pay and employees who earn more will see higher contribution for PF, as their basic salary falls to 50 per cent under the new pay code. The same is with respect to gratuity contribution.

What about taxes?

The higher basic pay of 50 percent under the new pay code will also affect how much tax a person has to pay. According to experts, salary restructuring can increase the tax liability of those who own only 50 percent of their tax-capping option CTC. Will be limited to On the other hand, low and middle pay brackets may not face any additional tax burden and may also enjoy higher retirement benefits. Therefore, it seems that the new salary code is likely to benefit lower and middle-income people more than high-income people.