New Delhi: The government is expected to announce higher allowances for 4.8 million central government employees and 5.2 million pensioners in March with a view to give a boost to its employees.
After Finance Minister Arun Jaitley on Wednesday in his Budget speech announced the reduction of the existing rate of taxation for salaried class with income ranging between Rs 2.5 lakh to Rs 5 lakh to 5% instead of 10%.
the Finance Minister also said in his budget that there would be zero tax liability for people getting income up to Rs 3 lakhs p.a. and the income tax liability will only be Rs 2,500 for people with income between Rs 3 and Rs 3.5 lakhs.
The Finance Ministry is hopeful for the announcement of higher allowances in March after the completion of five states assemblies’ poll process as the model code of conduct has come into effect from January 4, the sources in the Ministry told us on condition of anonymity.
They also said higher allowances under the 7th Pay Commission recommendations should implement which would give them some financial comfort, a step they had hoped might be taken to implement in April in new financial year.
The implementation is to come in April after nine to ten months of getting basic pay hike of the central government employees.
Sources, however, said the government had no plan to give allowances in arrears from August for the central government employees.
“There’s no arrears on allowances will be given to employees,” they confirmed.
The pay commission had recommended abolition of 51 allowances and subsuming 37 others out of 196 allowances.
So the government hiked the basic pay and referred hike in allowances other than dearness allowance to the ‘Committee on Allowances’ headed by the Finance Secretary Ashok Lavasa for examination.
The ‘Committee on Allowances’ has finalized the report on the allowances in October, however the government gave extension the committee till February 22, 2017 to submit its report for getting normalized the cash crunch period.
After getting the report on the allowances, Finance Minister Arun Jaitley is expected to announce the higher allowances in mid-March.