7th Pay Commission latest update: Big changes likely in Salary, DA, PF, Gratuity, travel allowance; know details here

New Delhi: In what is likely to give major boost to 50 lakh central government employees and 61 lakh pensioners, the government is reportedly set to make decision on hike in Dearness Allowance (DA) and Dearness Relief (DR) as per the current 28 percent rate of inflation.

According to fresh media reports, the government has decided to increased dearness allowance by 4 percent, thus meaning, the dearness allowance of central employees will  increase from 17 percent to 21 percent. Although the benefit of the allowance will start coming from January, there has been no official announcement regarding this. Central employees and pensioners are eagerly waiting for this official announcement of the government, media reports said.

The finance ministry had in April 2020 decided to put on hold increment in dearness allowance (DA) for 50 lakh central government employees and 61 lakh pensioners till July 2021 due to the COVID-19 crisis.

Reports further added that as per the suggestions of the 7th Pay Commission, the Travel Allowance-TA for Central employees will also increase along with Dearness Allowance. TA for Central employees will reportedly increase by 8 percent.

Meanwhile, the government had recently notified draft rules under Code on Wages 2019, following which take-home pay of employees may be reduced from next financial year ie, April 2021 because the draft rule required companies to restructure their salary break up.

The draft rules mention that employees' allowance component cannot exceed 50 percent of the total pay package, resulting which, companies or employers will have to allocate 50 percent of the salary to basic salary component. This also means that there will be a consequent rise in gratuity and PF contribution of the employee.

Hence, while the take home pay of the employees may be reduced, the Gratuity and PF component may rise.