How to calculate salary, pension and arrears in 7th Pay Commission

Confused about your new salary, pension and arrears with the implementation of seventh pay commission? Here are the simple steps to make calculations yourself without any hassle.

As we all are aware that Seventh Pay Commission has been implemented in the nation. But most of the aware are still confused about how to do different calculations. Here are the simple steps to do calculations at your own. But before proceeding further, lets clear some other basic doubts which you might have.

Am I eligible for 7th pay commission?

All central govt. employees who are appointed as full time employee and who are paid from civil account are eligible for 7th pay commission. To be more clear, following people will not get the benefits of seventh pay commission.
  • Part time employees
  • Persons appointed on contract basis
  • Staff paid from Contingency fund
  • People re-appointed after retirement
  • Locally employed staff at foreign embassy (Indian offices)
  • Civil defence or PSU employees
  • Employees of all departments under State Govt.
However, this depends on respective state govt. that whether it is willing to implement 7th pay commission or not. For the time being, Gujarat state govt. has announced to implement it whereas UP govt. is planning over it.

How to calculate salary

To calculate your new salary according to this structure, you need to follow these steps. Suppose your current basic salary is Rs. 10,000 per month in the Pay Band of Rs. 5200- 20200 with grade pay Rs. 1800 pm. Thus your present basic pay is the sum of Rs. 10,000+ 1,800 which stands to be Rs. 11800 per month. According to current structure, you are getting DA @ 125% of your basic pay which stands to be Rs. 14750 (125% of Rs. 11800). Thus your total salary is Rs. 26550 per month (Rs. 11800+ 14750).

7th Pay commission chart

After the implementation of seventh pay commission, you need to multiply your basic pay with 2.57 to find out your updated figure. This figure stands to be 30326 (11800 X 2.57). Now look at the chart provided here. Go to the appropriate grade pay column (which is Rs. 1800 in our example). Find out the closest figure equivalent to or higher than recently calculated figure (30326) which is 30600. This is your new salary and the amount of increment in your salary is Rs. 4050 (Rs. 30600- Rs. 26550).

How to calculate pension

Now suppose your basic pension is Rs. 10,000 per month and you are also getting DA @ 125% on basic pension w.e.f. 01-01-2016. Thus your current pension is Rs. 10,000+ 12,500= Rs. 22,500 per month. You need to multiply your present basic pension with 2.57 under new structure. This figure stands out to Rs. 10000 X 2.57 = 25700 per month. Thus increment in your pension will be Rs. 25700- Rs. 22500= Rs. 3200 per month. 3% annual increment will also be added in your new pension depending upon your service length.

(Please note that pension related gazette notification is not yet issued. More clarifications can be only after its release.)

How to calculate arrears

According to 7th pay commission, new salary or pension will be paid w.e.f. 01-01-2016. You just need to calculate your new salary or pension as per the procedure provided above and multiply it with number of months since January 2016. This will be your arrear.

When should I take increment or promotion?

All central government employees will now get two choices. You can select any date out of 01 January or 01 July and get increment in any one month. You need to select the month considering the most beneficial option for you.

Please note that government is planning to revise Dearness Allowance. Govt. will decide new rates and dates of implementation of new DA. But, now it will be calculated from zero. Thus, if the govt. will announce 3% DA, then it will be 3% in total. Earlier DA of 125% will now be vanished.

ACR grading

A change has been introduced in Modified Assured Career Progression (MACP). It has been clarified that no regular appraisal or increment will be given if your work will not be according to the parameters. Thus, it will also effect regular promotion. Heretobefore, employees were eligible for increment or promotion if ACR stood be 'Good', but now the parameter has been changed to 'Very Good'. It has also been clarified that promotion policy under MACP on the completion of 10, 20 or 30 years of service will continue as before. Thus, employees are sure to get three promotions.

Term of service required for VRS under 7th pay commission:
No fresh provision has been issued under new structure for Voluntary Retirement Scheme. As before, it can be availed after 20 years of service.

Article by Nidhi
Nidhi is a freelance content writer with 10+ years of experience. She has a great passion to write on valuable topics so as to provide accurate information to her readers. She is also keen to provide employment to all Indians and so posts various job openings too in this website.

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More articles: Seventh Pay Commission Pension How to Salary


Author: Partha K.14 Aug 2016 Member Level: Diamond   Points : 5

An excellent article from the author! Thumps up to her.

In the first para itself, she has clearly indicated who are eligible to get the benefits of the VIIth CPC. This will remove all confusion in this regard. So far as calculation of new basic pay and basic pension w.e.f. 1st January, 2016 is concerned, the most important factor is the multiplication factor of 2.57. The basic pay of an employee or a pensioner is to be multiplied by 2.57 and the next available basic (from the table corresponding to his/her level) will be his/her revised basic as on 1.1.2016. At that point of time, the DA will be taken as 0. In case of the pensioners, 3% annual increment will be added in the new pension depending upon the service rendered by the pensioner.

So far as new rate of HRA and rate other allowances are concerned, the matter has again been referred to a committee which will re-examine the issue and submits its report in another 4 months.

The employees will receive the salary at new basic and arrears in August, 2016. The employees will also have to exercise an option regarding payment of arrears (whether they want it in full or want to put a part of it in GPF).

Making an effort to improve the efficiency in functioning of the Government, it has been decided that no regular appraisal or increment will be given if an individual employee's performance is not up to the pre-determined parameters thus affecting the prospect of regular promotion.

Concluding my comments, I again thank the author for this excellent article.

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