Confusion prevails on the tax treatment of the pay arrears that Central government staff are set to get as part of their latest wage revision. While tax experts and the income tax department maintained that the entire arrears are to be taxed this fiscal (even though they would get only 40% of the arrears this fiscal), another section of the finance ministry said that they would be taxed for only what they get this year. The government had decided to pay 40% arrears of their increased salaries this year and the rest next year to reduce the burden on the exchequer.
At a briefing on the implementation of the latest wage rise for central government staff, an official of the finance ministry said, “the instruction to the ministry is to deduct tax only when it is paid.” The officials, however, declined to speak on record. “Government instructions issued on August 30 regarding fixation of pay and payment of arrears consequent upon the implementation of the Sixth Pay Commission’s recommendations, clearly states that in authorising the arrears, income tax as due may also be deducted and credited to the government. Generally speaking, income earned in a year is taxed in that particular year only”, said the official. Sources in the income tax department, however maintained that law as it stands today, provides for deducting the tax on the entire amount when it is ‘allowed’, irrespective of when they actually get the money. They said that the supreme court had upheld the provision regarding this in a case of CIT versus L W Russel 53ITR91.
Income Tax Act says that any arrears of salary “paid or allowed” to him in the previous year, if not charged to income-tax for any previous year, can be charged to income-tax under the head salaries. The court had in its verdict said the expression “allowed” is of wider connotation and any credit made in an employees account is covered by it.
It is equivalent to find/taking into account/set apart/granted and implies that the right is conferred on the employee in respect of the perquisite, it had said. The government had last month announced an average increase of 21% in the wages of employees.
Source : The Economic Times
Thursday, September 4, 2008
No raw deal for defence officers: Govt
The government on Wednesday refuted reports that there were wide disparities in salaries of civilian employees and defence officers.
“It is wrong to say that defence officers have been given a raw deal,” a senior finance ministry official said.
The Chiefs of Staff Committee (COSC) has pointed out anomalies in the revised Sixth Pay Commission report and is not in favour of the report being implemented in its current form. The COSC, with the three chiefs on board, has sought the intervention of Defence Minister A.K. Antony to freeze its implementation until issues pertaining to pay parity and dilution of the status of defence officers are addressed. Defence ministry sources said the armed forces have made a presentation to Antony, who has assured support.
The military is livid about the introduction of disparity in pay bands that has placed lieutenant col-onels and equivalents in scales lower than their civilian/paramilitary counterparts.
The main grouse of the armed forces is that director-rank IAS officers have been quietly put in a higher pay band (PB-4), while lieutenant colonels, drawing the same pay earlier, have been retained in the lower PB-3.
The finance ministry official said the comparison is not appropriate as lieutenant colonels and directors were not comparable on rank equivalence terms.
Also, the military brass cannot digest why lieutenant generals and equivalent haven’t been included in the new category of Higher Administrative Grade-plus. Only director generals of police and army commanders figure in this grade. How can the government justify enhancing the status of a DGP over a lieutenant general commanding a strike corps or the Strategic Forces Command,” asked an officer.
A lower grade pay for middle-rung defence officers compared to their civilian counterparts has also not gone down well with the armed forces. The finance ministry official, however, said about 60 per cent of the total pay and allowances (excluding railway employees) after the implementation of the pay commission’s recommendations would accrue to defence forces.
Source : Hindustan Times
“It is wrong to say that defence officers have been given a raw deal,” a senior finance ministry official said.
The Chiefs of Staff Committee (COSC) has pointed out anomalies in the revised Sixth Pay Commission report and is not in favour of the report being implemented in its current form. The COSC, with the three chiefs on board, has sought the intervention of Defence Minister A.K. Antony to freeze its implementation until issues pertaining to pay parity and dilution of the status of defence officers are addressed. Defence ministry sources said the armed forces have made a presentation to Antony, who has assured support.
The military is livid about the introduction of disparity in pay bands that has placed lieutenant col-onels and equivalents in scales lower than their civilian/paramilitary counterparts.
The main grouse of the armed forces is that director-rank IAS officers have been quietly put in a higher pay band (PB-4), while lieutenant colonels, drawing the same pay earlier, have been retained in the lower PB-3.
The finance ministry official said the comparison is not appropriate as lieutenant colonels and directors were not comparable on rank equivalence terms.
Also, the military brass cannot digest why lieutenant generals and equivalent haven’t been included in the new category of Higher Administrative Grade-plus. Only director generals of police and army commanders figure in this grade. How can the government justify enhancing the status of a DGP over a lieutenant general commanding a strike corps or the Strategic Forces Command,” asked an officer.
A lower grade pay for middle-rung defence officers compared to their civilian counterparts has also not gone down well with the armed forces. The finance ministry official, however, said about 60 per cent of the total pay and allowances (excluding railway employees) after the implementation of the pay commission’s recommendations would accrue to defence forces.
Source : Hindustan Times
Armed forces top brass waiting for anomalies to go
NEW DELHI: A day after the government notified the revised pay scale for armed forces officers, their top brass are understood to have conveyed their unwillingness to implement the Sixth Pay Commission report until anomalies are removed and the status of downdgraded ranks is restored.
Crux of the problem
For the past two days, faced with resentment by middle and senior level officers, top officials from the three services have been closeted with Defence Ministry officials to explain the downgrading of the status of colonels and brigadiers. However, they appreciate the new pay scales for personnel below officer rank (PBOR) as well as aspects such as full pension on completion of 20 years of service for officers and 15 years for PBORs. Their unwillingness to implement the pay panel’s recommendations revolves round the case of Colonels and Brigadiers and their equivalent in the navy and the air force.
Sources said the Fifth Pay Commission recommended pay received by a Lieutenant Colonel on the bottom of the scale as on January 1, 2006 was about Rs. 28,000 compared to Rs. 26,500 for a civil Non-Functional Selection Grade (NFSG) officer. But according to the Sixth Pay Commission, a Lt. Col. would receive Rs. 31,500 as against Rs. 45,000 for an NFSG officer at the bottom of the scale. The NFSG officers who were drawing a pay lesser than Lt. Colonels are now in Pay Band 4, while Lt. Colonels remain in Pay Band 3. The NFSG officers on the civil side include superintending engineers of the Central Engineering Services, the Directors of the government of India, commandants in Central police organisations, Additional Commissioners of Income Tax and scientists ‘E’ of the Central Scientific Departments.
The sources said Defence Minister A.K. Antony gave the assurance that he would take up the anomalies with the government and attempt to get them removed.
It was on his initiative that the government had set up a high level Pay Commission review panel to look into the grievances of the armed forces.
While some benefits did accrue to the officers and PBORs, the notification left colonels and brigadiers and their equivalents, considered the backbone of the armed forces’ officer cadre, dissatisfied.
Source : The Hindu
Crux of the problem
For the past two days, faced with resentment by middle and senior level officers, top officials from the three services have been closeted with Defence Ministry officials to explain the downgrading of the status of colonels and brigadiers. However, they appreciate the new pay scales for personnel below officer rank (PBOR) as well as aspects such as full pension on completion of 20 years of service for officers and 15 years for PBORs. Their unwillingness to implement the pay panel’s recommendations revolves round the case of Colonels and Brigadiers and their equivalent in the navy and the air force.
Sources said the Fifth Pay Commission recommended pay received by a Lieutenant Colonel on the bottom of the scale as on January 1, 2006 was about Rs. 28,000 compared to Rs. 26,500 for a civil Non-Functional Selection Grade (NFSG) officer. But according to the Sixth Pay Commission, a Lt. Col. would receive Rs. 31,500 as against Rs. 45,000 for an NFSG officer at the bottom of the scale. The NFSG officers who were drawing a pay lesser than Lt. Colonels are now in Pay Band 4, while Lt. Colonels remain in Pay Band 3. The NFSG officers on the civil side include superintending engineers of the Central Engineering Services, the Directors of the government of India, commandants in Central police organisations, Additional Commissioners of Income Tax and scientists ‘E’ of the Central Scientific Departments.
The sources said Defence Minister A.K. Antony gave the assurance that he would take up the anomalies with the government and attempt to get them removed.
It was on his initiative that the government had set up a high level Pay Commission review panel to look into the grievances of the armed forces.
While some benefits did accrue to the officers and PBORs, the notification left colonels and brigadiers and their equivalents, considered the backbone of the armed forces’ officer cadre, dissatisfied.
Source : The Hindu
Wednesday, September 3, 2008
Govt to levy income-tax on 40 per cent pay arrears this year
New Delhi, Sep 3 (PTI) Government today said it would tax only 40 per cent of salary arrears to be paid to central government employees in the current fiscal on implementation of Sixth Pay Commission recommendations.
Generally speaking income earned in a year is taxed in that particular year, official sources said.
A section of the media today reported that the entire amount of arrears would attract tax this fiscal.
As per the notification issued by the government last month, central government employees will get 40 per cent of arrears during the current financial year and the remaining amount in the next financial year.
Government instructions issued on August 30, 2008, regarding fixation of pay and payment arrears consequent to implementation of the Sixth Central Pay Commission recommendations clearly states that in authorising the arrears income tax as due may also be deducted and credited to the government.
The arrears with effect from January 2006 would cost Rs 29,373 crore. Of the arrears, 40 per cent would be paid during the current year to the 50 lakh employees of the central government.
The revised pay scales will add Rs 4,500-5,500 crore to the government exchequer this fiscal in the form of personal income tax.
Besides, some money would also come through indirect taxes as some of the increased pay would go into buying products and services, official sources said here.
Source : PTI
Generally speaking income earned in a year is taxed in that particular year, official sources said.
A section of the media today reported that the entire amount of arrears would attract tax this fiscal.
As per the notification issued by the government last month, central government employees will get 40 per cent of arrears during the current financial year and the remaining amount in the next financial year.
Government instructions issued on August 30, 2008, regarding fixation of pay and payment arrears consequent to implementation of the Sixth Central Pay Commission recommendations clearly states that in authorising the arrears income tax as due may also be deducted and credited to the government.
The arrears with effect from January 2006 would cost Rs 29,373 crore. Of the arrears, 40 per cent would be paid during the current year to the 50 lakh employees of the central government.
The revised pay scales will add Rs 4,500-5,500 crore to the government exchequer this fiscal in the form of personal income tax.
Besides, some money would also come through indirect taxes as some of the increased pay would go into buying products and services, official sources said here.
Source : PTI
Tuesday, September 2, 2008
New D A Formula as per Govt Announcement
Recommendation of Sixth Central Pay Commission - Decision of Government relating to the grant of Dearness Allowance to the Central Government Servants - Revised Rates.
New rates of DA has been announced on http://india.gov.in/govt/paycommission.php (http://164.100.50.223/six_pay_comm/allowances.pdf)
From 1-1-2006 : No Dearness Allowance
From 1-7-2006 : 2% of Basic Pay and NPA, where applicable
From 1-1-2007 : 6% of Basic Pay and NPA, where applicable
From 1-7-2007 : 9% of Basic Pay and NPA, where applicable
From 1-1-2008 : 12% of Basic Pay and NPA, where applicable
From 1-7-2008 : 16% of Basic Pay and NPA, where applicable
For notification regading pension, the following link may be seen
http://pensionersportal.gov.in/paycommresol.pdf
Pensioners are eagerly waiting for their new enhanced pension. The revised table for fixation of Pension/Family Pension of Pre 2006 Pensioners have been published by the Govt.
See the table and get enhanced pension.
http://pensionersportal.gov.in/sixthCPC/pensiontable_sixthpc.pdf
New rates of DA has been announced on http://india.gov.in/govt/paycommission.php (http://164.100.50.223/six_pay_comm/allowances.pdf)
From 1-1-2006 : No Dearness Allowance
From 1-7-2006 : 2% of Basic Pay and NPA, where applicable
From 1-1-2007 : 6% of Basic Pay and NPA, where applicable
From 1-7-2007 : 9% of Basic Pay and NPA, where applicable
From 1-1-2008 : 12% of Basic Pay and NPA, where applicable
From 1-7-2008 : 16% of Basic Pay and NPA, where applicable
For notification regading pension, the following link may be seen
http://pensionersportal.gov.in/paycommresol.pdf
Pensioners are eagerly waiting for their new enhanced pension. The revised table for fixation of Pension/Family Pension of Pre 2006 Pensioners have been published by the Govt.
See the table and get enhanced pension.
http://pensionersportal.gov.in/sixthCPC/pensiontable_sixthpc.pdf
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