## Monday 5 July 2021

### 7th pay Commission: Learn how the salaries of central employees are calculated after increase in DA, what is Fitment Factor?

7th pay Commission: Learn how the salaries of central employees are calculated after increase in DA, what is Fitment Factor?

7th pay Commission: Learn how the salaries of central employees are calculated after increase in DA, what is Fitment Factor?

7th pay Commission: The central government has recently announced an increase in inflation allowance for its employees and pensioners.  From July 1, central employees will get an additional salary in which they will get 28 per cent inflation allowance instead of 17 per cent.  Currently, the fitment factor for 52 lakh central employees is a matter of debate.  This is the formula on the basis of which the salaries of central employees are determined.

The dearness allowance of central employees could go up from 17 per cent to 28 per cent.  The increase includes a 3% increase in DA from January to June 2020, a 4% increase from July to December 2020 and a 4% increase from January to June 2021.

This means that the total DA calculation (17 + 4 + 3 + 4) will be 28 percent
This is how it is calculated

The fitment factor plays an important role in the calculation of salary.  This fitment factor is kept at 2.57 for the 7th pay punch.  If an example would be easy to understand.  If a person's basic salary is Rs. 10000 as admission, then the monthly basic salary will be Rs. 25700 (10000 × 2.57).  After the monthly basic salary, it includes many types of allowances.  These include allowances such as Dearness Allowance, Travel Allowance, Medical Reimbursement.  After this complete calculation the basic salary and total monthly salary are determined.

Millions of central government employees who are eagerly awaiting the hike in inflation allowance (DA) will get a pay hike from July 1.  The government has already said in Parliament that it will get its withheld Inflation Allowance (DA) and Inflation Relief (DR) from July 1, 2021.
Currently, the minimum wage is Rs 18,000 according to the salary metrics of central employees.  It is expected to add 15 per cent inflation allowance to the existing salary metrics.  So Rs 2,700 per month will be added directly to the salary as DA on the existing salary metric.  Thus, the total inflation allowance will increase by Rs 32,400 on an annual basis.  Last year the government withheld costly allowances and inflation relief for employees and pensioners because of the Corona, an increase that is now going to be met.

The decision to reinstate DA from July 2021 will benefit 50 lakh central government employees and more than 65 lakh pensioners.  However, any increase in DA from 1 July will be effective from that day onwards meaning that employees will not receive any outstanding amount on DA reform for the previous period.

The benefit of inflation allowance will be available from July 1

The government has decided to increase the inflation allowance from July 1.  The increase in inflation allowance will also increase the provident fund contribution, gratuity contribution for central employees.  If we talk about provident fund, the monthly basic salary and dearness allowance of an employee is 12 per cent.  If the share of DA in this increases then the contribution of PF will also increase and retirement fund will increase.