7th Pay Commission: PF calculation, provident fund contribution rule, TA, DA, DR, gratuity for central government employees, pensioners EXPLAINED

7th Pay Commission: Minister of state for finance Anurag Thakur has recently in a written reply to the Rajya Sabha had said that the three pending installments of dearness allowance and dearness relief will be restored from July. 

ZeeBiz WebTeam | Mar 14, 2021, 09:00 AM IST

This comes as a big relief to government employees who have been getting DA at the previous rate, since the DA hike was put on a hold due to the Covid-19 pandemic. DA is generally revised twice a year — in January and July.

 

 

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Pending DA and likely hike in dearness allowance

Pending DA and likely hike in dearness allowance

The increment is due since January 2020, a total of three pending hikes— First in January 2020, second in July 2020 and the third in January 2021.For central government employees, dearness allowance (DA) is likely to be hiked from existing 17 per cent to 28 per cent (17 per cent plus 3 per cent for January to June 2020 plus 4 per cent for July to December 2020 and expected 4 per cent DA hike for January to June 2021). Crucially, this rise in DA will have a direct impact on their Provident Fund (PF) and Gratuity contribution along with monthly salary. Source: Pixabay

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7th CPC: PF calculation

7th CPC: PF calculation

Good news explained in simple manner - Speaking on how central government employees monthly PF and gratuity will change after DA restoration, Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "Central government employees' monthly Provident Fund (PF) contribution and gratuity are decided on the basis of basic salary plus DA. Since, DA will increase, PF and gratuity calculation is bound to go up as per the rise in DA." Source: PTI

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Central Government Employees' Provident Fund (PF) contribution rule

Central Government Employees' Provident Fund (PF) contribution rule


Jhaveri said that PF contribution rules allow up to 12 per cent of one's DA plus basic salary. So, if central government employees DA goes up from existing 17 per cent to 28 per cent, their PF and gratuity contribution will also rise in the same manner. Source: PTI

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Seventh Pay Commission Gratuity hike

Seventh Pay Commission Gratuity hike

As said above, central government employees (CGS) gratuity contribution is calculated on the basis of basic salary and Dearness Allowance (DA). As the DA will jump from existing 17 per cent to around 28 per cent for a CGS from July, monthly gratuity contribution is bound to leapfrog too in that case. Source: Reuters

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7th Pay Commission: Travel Allowance (TA)

7th Pay Commission: Travel Allowance (TA)

Central government employees Travel Allowance (TA) will go up as DA increases. So, in the wake of the DA hike from 17 per cent to 28 per cent from July 2021, TA is also expected to jump. Source: Reuters

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7th Pay Commission: DR benefit for pensioners

7th Pay Commission: DR benefit for pensioners

Since, central government pensioners DR benefit is directly linked with the DA hike of central government employees, the expected DA hike in July 2021 is expected to push up monthly pensions in the same manner. Source: PTI