7th Pay Commission: Central govt employees may have to pay income tax on allowances

The basic salary, bonus, allowances and other arrears as per 7th Pay Commission will come under the ambit of Income Tax as proposed in Finance Bill, 2017 which will lead government employees to pay tax on allowances.

Rupee. Photo: IANS

The revised allowances to central government employees as per 7th Pay Commission will come under the ambit of Income tax, a media report said.

Which means, the central government employees will need to pay the income tax on the allowances recieved under 7th Pay Commission in the financial year 2017-18.

The imposition of income tax on basic salary, bonus, allowances and others was proposed in Finance Bill 2017, as reported by OneIndia.

As per the report, this tax treatment under Finance Bill will be for both government and non-government employees. The government is of view that excluding basic salary of government employees from paying taxes, will be "discriminatory" to others.

However, this news may have upset the central government employees even more. After the Union Cabinet approved the recommendation of 7th CPC on June 28, the employees have raised various concerns over the revised salary and allowances.

The employees had demanded the allowances to come into effect with arrears from July 2016. However, under the modified 7th CPC, Cabinet said that the allowances will come into effect from July 2017.

After the government's decision, Odisha state government employees protested and warned of "severe consequences".

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