Impact on salary, PF contribution, other information in 10 points
DA calculator: On July 14, 2021, the Union cabinet approved the restoration of the high cost allowance (DA) for central government employees from July 1, 2021. While announcing the cabinet decision, the Minister of Information and Broadcasting, Anurag Thakur, said the DA hike will benefit the central government by 1.14 crore employees and retirees. He also informed that the approved DA is 28%, which means that the DA of a central government employee will drop from 17% to 28%, registering an 11% increase in the DA of central government officials.
Provision of R&D to retirees of 60 lakh
The cabinet decision will also benefit around 60 lakhs of central government retirees, as their High Cost Relief (DR) allowance will also be restored and resumed with DA benefits from central government employees. However, the Central Union Minister made it clear that DA and DR arrears for around 1.14 central government employees and retirees would not be paid for the period January 2020 to June 2021.
Impact of the DA increase on the salaries of central government employees
As the DA of central government employees will drop from 17% to 28% as of July 1, 2021, their monthly salary is expected to increase along with the increase in DA. This increase can be calculated on the basis of the employee’s basic salary. If the monthly base salary of a central government employee is â¹20,000 then his existing DA per month is â¹3400 whereas after increasing the DA, the monthly DA payable to the same central government will be â¹5600. Likewise, other central government officials can check the increase in their monthly DA amount.
Here we list the following 10 important facts about the DA hike:
1]The DA and DR rates will increase by 11%, as the current DA rate is 17%, while the approved DA and DR rate applicable from July 1, 2021 is 28%.
2]The increase in DA will result in an increase in the monthly contingency fund (PF) and employee contribution to bonuses as monthly PF and bonuses are deducted based on an employee’s base salary and DA. As DA has increased, his monthly contribution to FP and bonus will also go north.
3]To cope with rising inflation, DA is announced twice a year for the period January to June and July to December.
4]This increase in AD and DR will place an additional annual burden of â¹34,401 on the chessboard of government.
5]For this fiscal year, this increase in AD and DR will put â¹22,934.56 crore burden on the chessboard of government.
6]The increase in DA and DR will be reinstated in July, which means that central government employees and retirees will benefit from an increase in DA and DR benefits from July 2021.
7]Union Minister Anurag Thakur also said that the DA and DR rates for the period January 2020 to June 2021 will remain at 17% for central government employees.
8]This means that central government employees and retirees will not receive three DA and DR arrears payments due from January 1, 2020, July 1, 2020, and January 1, 2021.
9]In March 2020, the center announced a DA of 4%, which means that the DA for central government employees would have increased to 21% from January 2020, but due to the freeze on DA and DR benefits, the AD remained at 17% until June 2021.
10]The DA increase announced for the period July to December 2020 was 3%, while the DA increase for the period January to June 2021 is 4%. This 28 percent DA approved by the union cabinet is the sum of all DA increases announced during the period that DA and DR benefits were frozen.
Never miss a story! Stay connected and informed with Mint. Download our app now !!