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Seventh Pay Commission: Govt to examine minimum pay

New Delhi: The central government is set to examine the minimum pay, which was recommended by the Seventh pay commission.
Finance Minister Arun Jaitley

The Implementation cell of the Seventh pay commission recommendation in Finance Ministry is working hard to examine the minimum pay as the pay commission increased the pay gap between the minimum and maximum from existing 1:12 to 1: 13.8.
The government data shows that the pay panel recommended the lowest increase in basic pay i.e. 14.27 per cent since independence.
Sources in the Finance ministry said there appears to be a pattern of minimum pay not only a particular sector, but other segments are required to study as employees’s body and Trade Unions expressed resentment over the recommendations of the Seventh Pay Commission and demanded at least 40% hike in the pay of various categories of government employees.
“We found through government documentation, that are widely available, the preponderance of the evidence strongly supports the seventh pay commission report complexity.” said sources.
“But, that Implementation cell is concentrated as well on a range of different sectors like allowances, advances and risk-hardship matrix. So we need to look at those particular sections very closely.” he added.
The lowest paid central government employees will actually take home the lower salary than what they are currently drawing after acceptance of the Seventh Pay Commission report without modification.
A lowest paid central government employee, who was appointed in the Grade Pay of Rs 1800 in the end of 2015 in Group A city and he is residing in government- quarter. His will get net pay January 2016 Rs.16,370 in existing pay rules.
Illustration- Basic Pay = Pay Band Rs 5200 + Grade Pay Rs 1800= Rs 7000 + Expected DA of 125%, Rs 8750 + Transport Allowance with DA Rs.1350 = Gross Pay Rs. 17100
Deductions: NPS 10% of basic Pay = Rs 700 + CGEGIS Rs 30 = Total 730, Net Pay =17,100 – 730 = 16370
The same employee will get net pay in January 2016 under the Seventh Pay Commission recommendation without modification, Basic Pay Rs 18,000 – NPS 10% of basic Pay Rs 1800 – CGEGIS Rs 1500 = Rs 14,700. Accordingly, he will be a loser of Rs 1,670.
A minimum pay of Rs 18,000 per month and a maximum of Rs 2.5 lakh per month has been recommended by the Seventh pay commission, headed by Justice A K Mathur, that presented its 900-page report to Finance Minister Arun Jaitley on November 19.
The The Seventh Pay Commission recommended raise in basic pay, a key segment that determines several allowances, is only 14.27 per cent – the lowest in 70 years. The previous commission had recommended a 20 per cent hike, which the government doubled while implementing it in 2008.
The Commission recommended a 23.55 per cent increase in the cumulative earnings of central government employees.
The figure of 23.55 per cent covers the increases in pay and allowances.
The overall increase in pay and allowances and pensions over the business-as-usual scenario will be 23.55 per cent, the report said.
Rules regarding quoting of PAN for specified transactions amended

The Government is committed to curbing the circulation of black money and widening of tax base. To collect information of certain types of transactions from third parties in a non-intrusive manner, the Income-tax Rules require quoting of Permanent Account Number (PAN) where the transactions exceed a specified limit. Persons who do not hold PAN are required to fill a form and furnish any one of the specified documents to establish their identity.
              One of the recommendations of the Special Investigation Team (SIT) on Black Money was that quoting of PAN should be made mandatory for all sales and purchases of goods and services where the payment exceeds Rs.1 lakh. Accepting this recommendation, the Finance Minister made an announcement to this effect in his Budget Speech. The Government has since received numerous representations from various quarters regarding the burden of compliance this proposal would entail. Considering the representations, it has been decided that quoting of PAN will be required for transactions of an amount exceeding Rs.2 lakh regardless of the mode of payment.
             To bring a balance between burden of compliance on legitimate transactions and the need to capture information relating to transactions of higher value, the Government has also enhanced the monetary limits of certain transactions which require quoting of PAN. The monetary limits have now been raised to Rs. 10 lakh from Rs. 5 lakh for sale or purchase of immovable property, to Rs.50,000 from Rs. 25,000 in the case of hotel or restaurant bills paid at any one time, and to Rs. 1 lakh from Rs. 50,000 for purchase or sale of shares of an unlisted company. In keeping with the Government’s thrust on financial inclusion, opening of a no-frills bank account such as a Jan Dhan Account will not require PAN.  Other than that, the requirement of PAN applies to opening of all bank accounts including in co-operative banks.
             The changes to the Rules will take effect from 1st January, 2016.
The above changes in the rules are expected to be useful in widening the tax net by non-intrusive methods. They are also expected to help in curbing black money and move towards a cashless economy.
A chart highlighting the key changes to Rule 114B of the Income-tax Act is attached.

Existing requirement
New requirement
Immovable property
Sale/ purchase valued at Rs.5  lakh or more
i.       Sale/ purchase exceeding Rs.10 lakh;
ii.     Properties valued by Stamp Valuation authority at amount exceeding Rs.10 lakh will also need PAN.
Motor vehicle (other than two wheeler)
All sales/purchases
No change
Time deposit
Time deposit exceeding Rs.50,000/- with a banking company
i.      Deposits with Co-op banks, Post Office, Nidhi, NBFC companies will also need PAN;
ii.    Deposits aggregating to more than Rs.5 lakh   during the year will also need PAN
Deposit with Post Office Savings Bank
Exceeding Rs.50,000/-
Sale or purchase of securities
Contract for sale/purchase of a value exceeding Rs.1 lakh
No change
Opening an account (other than time deposit) with a banking company.
All new accounts.
i. Basic Savings Bank Deposit Account excluded (no PAN requirement for opening these accounts);
ii. Co-operative banks also to comply
Installation of telephone/ cellphone connections
All instances
Hotel/restaurant bill(s)
Exceeding Rs.25,000/- at any one time (by any mode of payment)
Cash payment exceeding Rs.50,000/-.
Cash purchase of bank drafts/ pay orders/ banker's cheques
Amount aggregating to Rs.50,000/- or more during any one day
Exceeding Rs.50,000/- on any one day.
Cash deposit with banking company
Cash aggregating to Rs.50,000/- or more during any one day
Cash deposit exceeding Rs.50,000/- in a day.
Foreign travel
Cash payment in connection with foreign travel  of an amount exceeding Rs.25,000/- at any one time (including fare, payment to travel agent, purchase of forex)
Cash payment in connection with foreign travel or purchase of foreign currency of an amount exceeding Rs.50,000/- at any one time (including fare, payment to travel agent)
Credit card
Application to banking company/ any other company/institution for credit card
No change.
Co-operative banks also to comply.
Mutual fund units
Payment of Rs.50,000/- or more for purchase
Payment exceeding Rs.50,000/- for purchase.
Shares of company
Payment of Rs.50,000/-  or more to a company for acquiring its shares
i.      Opening a demat account;
ii.    Purchase or sale of shares of an unlisted company for an amount exceeding Rs.1 lakh per transaction.
Debentures/ bonds
Payment of Rs.50,000/- or more to a company/ institution for acquiring its debentures/ bonds
Payment exceeding Rs.50,000/-.
RBI bonds
Payment of Rs.50,000/-or more to RBI for acquiring its bonds
Payment exceeding Rs.50,000/-.
Life insurance premium
Payment of Rs.50,000/- or more in a year as premium  to an insurer
Payment exceeding Rs.50,000/- in a year.
Purchase of jewellery/bullion
Payment of Rs.5 lakh or more at any one time or against a bill
Deleted and merged with next item in this table
Purchases or sales of goods or services
No requirement
Purchase/ sale of any goods or services exceeding Rs.2 lakh per transaction.
Cash cards/ prepaid instruments issued under Payment & Settlement Act
No requirement
Cash payment aggregating to more than Rs.50,000 in a year.