The modified recommendations of the Sixth Central Pay Commission, notified by the government on Friday, also ensures a rise in the children education allowance besides an increase by 21 per cent on an average in the salaries of the government employees.
Retrospective effect

The revised salaries will reflect in next month’s pay though the report is to be implemented with retrospective effect from January 1, 2006.

The arrears would be given in cash – 40 per cent this financial year and 60 per cent in the next fiscal.
Reimbursement

According to the notification, children education allowance will be reimbursed up to maximum Rs.1,000 per child per month subject to a maximum of two children from the present Rs. 50 per child.
Hostel subsidy

Besides, hostel subsidy has been raised to the maximum limit of Rs. 3,000 per month per child from Rs. 300 currently.

Also, these reimbursements would be automatically raised by 25 per cent once dearness allowance on the revised pay bands become 50 per cent of the basic salary, the notification said.

As such, an employee getting Rs. 1,000 would get Rs. 1,250 per child per month and hostel subsidy would increase up to Rs. 3,750 when Dearness Allowance becomes 50 per cent of the basic salary.

New Delhi: For lakhs of central government employees looking forward to receiving 40% of the accumulated arrears on their increased salary next month, in time for some festive spending, here’s a dampener. The government has decided to levy tax on the entire amount of arrears — 60% of which will be paid next year — in the current fiscal itself.

For most employees, the decision would virtually wipe out almost the entire 40% arrears to be paid to them this year. Senior bureaucrats will suffer most as their tax would be topped with a surcharge of 10%, on income of Rs 10 lakh and above.

A senior finance ministry official said the surcharge to be paid by officers of the rank of joint secretary and above ranges between Rs 24,600 and Rs 52,500. The impact would be less on the lower grades.
The Centre had last month announced an average increase of 21% in salaries of its employees. The hikes, effective from January 1, 2006, would burden the exchequer by more than Rs 17,500 crore annually while the arrears alone account for more than Rs 29,000 crore.