7th Pay Commission latest updates: How your salary, PF, gratuity will be affected from April 1
After the implementation of the new wage code from April 1, 2021, the salary of government employees, as well as private-sector employees is likely to rise. The monthly Provident Fund (PF) and gratuity contribution may change from April 1 as the new wage code proposed by Modi government has the provision to have the employee’s basic salary at 50 per cent of one’s net monthly CTC. It means that if the new wage code gets implemented from April 1, 2021, then you will not get more than 50 per cent of your net monthly salary in form of allowance.
This will eventually affect the pay structure that includes the take-home pay, PF and Gratuity.
“This Ministry would soon be in a position to bring into force the four Codes, viz., Code on Wages, Industrial Relations, Occupational Safety, Health and Working Conditions and Social Security Codes,” said Apurva Chandra, Secretary, Labour & Employment on February 8. He added that the Centre has consulted all stakeholders while framing the rules.
It is expected that the Centre would soon announce the hike in DA for central government employees. The Finance Ministry has already said that keeping in mind the basic salary or pension of central employees, DA can be announced. The expenditure of DA and DR (Dearness Relief) is Rs 12,510 crore annually but after the increase, it is estimated to reach 14,595 crore. From January to June 2021, the government has to wait for the announcement of DA due to coronavirus pandemic.
Notably, the government is yet to announce any deadline on the implementation of the new wage code. It is however likely that the wage code would get implemented from April 1, 2021.
On the other hand, in the budget speech, Finance Minister Nirmala Sitharaman said that LTC has been kept in tax exemption due to COVID-19 pandemic. The government hopes that this scheme will also bring more money in the pockets of government employees, leading to increased spending. The economy will benefit from this entire system.