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How DA restoration will change 7th CPC pay matrix of CGS


7th Pay Commission salary calculator: After the announcement of Dearness Allowance (DA) restoration for around 52 lakh central government employees, central government servants (CGS) are busy calculating how it will change their 7th pay commission matrix. The reason for CGS’ 7th CPC salary calculation is due to the changes taking place in their 7th CPC pay matrix. As per the Narendra Modi Government’s announcement, center is going to restore DA benefit of central government employees from 1st July 2021. The Ministry of Finance (MoS) Anurag Thakur made an announcement last month in this regard in the Rajya Sabha in a written reply to a question.

DA hike impact on 7th Pay Commission Matrix

As the center has declared to subsume all three pending DA installments from 1st July 2021, a central government employee’s DA is expected to jump from existing 17 per cent to 28 per cent. This includes 3 per cent DA hike effective from 1st January 2020, 4 per cent DA hike effective from 1st July 2020 and expected 4 per cent DA hike due from 1st January 2021.

7th Pay Commission fitment factor

As per the Seventh Pay Commission rules, a central government employee’s salary is divided in three parts — basic salary, allowances and deductibles. Net CTC is a central government employee is summation of basic salary multiplied by the 7th CPC fitment factor plus all allowances. However, net salary is difference of Net CTC and deductibles like PF contribution, Gratuity, etc.

Since, 7th pay commission fitment factor is 2.57. A central government employee’s CTC other than allowance is a multiple of basic salary with 2.57. Suppose, a central government employees basic monthly salary is 20,000. In that case, that central government employee’s monthly CTC other than allowance will be 51,400 ( 20,000 x 2.57).

Now comes other part of CTC means allowance. This allowance includes Dearness Allowance (DA), Travel Allowance (TA), House Rent Allowance (TA), medical reimbursement, etc. Since, DA may rise from 17 per cent to 28 per cent from 1st July 2021, a central government will be eligible for 28 per cent DA, which is calculated on the basis of one’s basic salary. Similarly, one’s Travel Allowance (TA) will rise in sync with the DA. so, one’s TA will also rise. So, after the rise in DA, a central government employee’s allowance is also going to increase. So, this expected rise in DA of a central government employee is going to result in big leap in one’s monthly salary. apart from that, three installments of DA arrears are also going to do icing on the cake for CGS.

The possible DA hike will impact a central government employee’s monthly PF, Gratuity contribution too because CGS’ PF and gratuity contribution is calculated on the basis of basic salary plus DA. As DA is going to rise from 1st July 2021, an employee’s monthly Pf and gratuity contribution will also go northward. that means more money accumulation in the retirement-oriented funds like PF and Gratuity.

So, DA restoration is going to change 7th CPC pay matrix of a central government employee and the change is positive for them.

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