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Wednesday, February 14, 2018

Disability pension and compensation to ex servicemen and cadets

Disability Pension in cases of invalidment is granted to Armed Forces Personnel irrespective of qualifying service rendered which consists of service element and disability element. Armed Forces personnel who are retired / discharged with disability which is attributable to or aggravated by military service are also allowed disability element in addition to their service / retiring pension. With effect from 01.01.2006, the Disability Element is paid based on 30% of last emoluments drawn for 100% disability which is reduced pro-rata for lower percentages of disability.
Benefit of broad banding of percentage of disability was earlier allowed only for those invalided out from service. However, vide Ministry of Defence orders dated 4th and 5th September, 2017 the benefit of broad banding of percentage of disability has been extended to cases of retirement / discharge from service with disability of 20% or more.
Cadets during the entire duration of training in service academies i.e. during training period of Indian Military Academy (IMA) and Officers Training Academy (OTA) are entitled to stipend. The period of training is not treated as Commissioned Service. Cadets are not entitled to Disability Pension.
The scheme for grant of monthly ex-gratia awards in cases of death / disablement of Cadets (Direct) due to causes attributable to or aggravated by Military Training was introduced vide Ministry of Defence letter dated 16.04.1996 which was applicable with effect from 01.01.1986. Rates of Ex-gratia awards have been revised by each Pay Commission. The rates notified vide Ministry of Defence letter dated 04.09.2017, are as follows:-
In case of disablement:-
Monthly Ex-gratia amount: Rs.9,000/-pm.
Monthly Ex-gratia disability award: Rs.16,200/-pm for 100% disability, subject to pro-rata reduction for lower percentages of disability.
Constant Attendance Allowance: Rs.6,750/-pm, if applicable.
In case of death:-
Monthly Ex-gratia amount: Rs.9,000/-pm.
Ex-gratia lump sum compensation: Rs.12.5 lakhs.

Friday, February 2, 2018

7th CPC Travelling Allowance Rules : Finmin clarification for Daily Allowance

F. No. 19030/1/2017-E.IV
Government of India
Department of Expenditure
E.IV Branch
North Block, New Delhi.
Dated 01st February, 2018
Sub :- Travelling Allowance Rules — Implementation of the Recommendations of the Seventh Pay Commission.
Consequent upon the issuance of this Department’s O.M. of even number dated 13.07.2017 regarding implementation of recommendations of 7th CPC on Travelling Allowance (TA), various references are being received in this Department seeking clarification regarding admissibility of Daily Allowance (DA) in case Govt. employee avails free boarding and lodging.
2. The 6th CPC had changed the old concept of Daily Allowance by introducing reimbursement of Hotel Accommodation, Food Bill and Taxi Charges on production of vouchers for the same. Since this was a new concept, therefore, option was given to the employees to choose either the old 5th CPC single rate of DA or the new system of DA based on reimbursement of expenses as per 6’n CPC. The 7th CPC has recommended to continue the concept of reimbursement of Hotel Accommodation, Food Bill and Taxi Charges with the exception that vouchers are not required to be produced for Food Bills.
3. The matter regarding admissibility of DA in case of free boarding and lodging, has been considered in this Department. Daily Allowance is given to the Govt. employees as a reimbursement of the expenditure incurred by him on tour for his stay, food and travel at that station. In case of free boarding and lodging, the Govt. employee, if incurring any expenditure on local travel, can claim the same as per Para 2 E (i) and (iii) of the Annexure to O.M. of even No. dated 13.07.2017. The earlier system of giving 25% of DA is being discontinued. Also, after implementation of 7th CPC recommendations, the facility of DA at 5th CPC rates is done away with.
4. This is issued with the approval of Secretary (Expenditure).
Hindi version is attached.
(Nirmala Dev)
Deputy Secretary to the Government of India

Thursday, January 18, 2018

Abolition Of Study Allowance -CCS (Leave)

(Department of Personnel and Training)
New Delhi, the 1st January, 2018
G.S.R. 08(E). – In exercise of the powers conferred by the proviso to Article 309 read with clause (5) of article 148 of the Constitution and after consultation with the Comptroller and Auditor-General of India in relation to the persons serving in the Indian Audit and Accounts Department, the President hereby makes the following rules further to amend the Central Civil Services (Leave) Rules, 1972, namely: –
1. (1) These rules may be called the Central Civil Services (Leave) Second Amendment Rules, 2017.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Central Civil Services (Leave) Rules, 1972 (hereinafter referred to as the said rules), in rule 54, in subrule (3), the words “and subject to the other conditions laid down in rule 57 being satisfied, draw study allowance in respect thereof” shall be omitted.
3. In the said rules, in rule 56,-
(a) in sub-rule (1), for the words “House Rent Allowance and Study Allowance as admissible in accordance with the provisions of Rules 57 to 60, the words ” and House Rent Allowance” shall be substituted;
(b) in sub-rule (4), the words “as envisaged in sub-rule (2) of Rule 57,” shall be omitted;
(c) sub-rule (5), shall be omitted.
4. In the said rules, rule 57, 58 and 59 shall be omitted.
5. In the said rules, in rule 60, in sub-rule (2), the words “and the Study Allowance” shall be omitted.
6. In the said rules, in rule 63, in sub-rule (1), in clause (i), the words “Study Allowance” shall be omitted.
[F. No. 13023/1/2017-Estt. (L)]

Tuesday, January 9, 2018

Provident Fund Interest Earned After Retirement Can Be Taxed

For most employees, their provident fund (PF) account is the most significant accumulator of savings of their lifetime. A significant advantage, in addition to the tax deduction for contributions made by employees to the PF account and the tax exemption for contributions made by employers to the PF account, is that the rate of interest earned on the employee PF account is much higher than that on other debt investments. Besides, it is exempt from tax. This has a multiplier effect on account of the fact that the interest is retained in the account, and is therefore compounded.

Due to these factors, many employees choose to continue their PF accounts even after their retirement, though they and their employers cease to contribute to the accounts. They are often under the impression that this is a good tax-free investment, which will yield far more than other debt investments on account of the fact that the interest is exempt.

However, a recent Income Tax Appellate Tribunal decision, holding that such interest earned post-retirement of the employee is taxable, should serve as a warning to such employees.

In this case, which is before the Bangalore bench of the Tribunal, the taxpayer retired from the company in April 2002 after working there for 26 years. As on the date of retirement, the balance in the PF account was Rs37.94 lakh. The PF balance was withdrawn after 9 years in April 2011, by which time the balance had grown to Rs82.01 lakh, on account of interest earned subsequent to retirement, at rates ranging from 8.5% to 9.5% per annum.

The taxpayer did not include any part of the withdrawal in his income-tax return. The tax department, however, noticed the deposit of Rs82.01 lakh in his bank account. On receiving details of the deposit from the taxpayer, it sought to deny exemption to the entire withdrawal, on the ground that no claim for exemption had been made by the taxpayer in his return of income in respect of Rs37.94 lakh, whereas the balance Rs44.07 lakh, which was interest earned post-retirement, was not entitled to the exemption at all.

The Tribunal held that, while the balance of Rs37.94 lakh outstanding as at the date of retirement was exempt from tax, the interest earned subsequent to the retirement was taxable. This was on account of the fact that the exemption was for the ‘accumulated balance’, which was defined to mean the balance standing to the credit of the employee in the fund on the date of his ceasing to be an employee of that employer. The Tribunal, however, also decided that the interest was taxable in the respective years in which it was earned and credited to the PF account, and not in the year of withdrawal.

This decision was rendered in the context of a recognised PF, which means, a PF that was administered by the employer, and which had obtained exemption from contribution to the Employees’ Provident Fund (EPF) scheme administered by the Employees’ Provident Fund Organisation (EPFO) under section 17 of The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. It would also apply to the PF administered by EPFO, which is deemed to be a recognised PF by virtue of the Act.

There is a separate exemption in respect of the Public Provident Fund (PPF) account. Under that exemption, any payment from PPF is exempt, and not just the accumulated balance as on the date of retirement or cessation of employment. This is on account of the fact that contribution to and continuation of the PPF account is in no way linked to employment.

Therefore, post-retirement, an employee should take a decision as to whether to withdraw the PF balance or leave it with the fund, after factoring in the tax payable on the interest that may be earned. In case she chooses to leave it with the fund, the interest accrued and credited to the account each year should be offered to tax. This is important, particularly since most employees, during their employment, tend to overlook interest earned on their PF accounts and fail to disclose it as exempt income.

Today, therefore, a PF account allows you to accumulate funds tax-free only till your retirement. An employee is most vulnerable financially post her retirement, as she no longer gets a monthly salary. At this juncture, is it appropriate to have the tax benefit that she hitherto enjoyed also taken away, particularly as there are no tax-free investments available today in which she can put her PF money lump sum?

Perhaps, the government should consider extending the exemption to a period of 5 years post-retirement, so that the employee has time to plan and arrange her investments and then withdraw the PF amount. This would also ensure that the government will not have to suffer the burden of an indefinite tax exemption.

Source: LM

Thursday, December 21, 2017

Re-engagement of retired employees in exigencies of services.

Re-engagement of retired employees in exigencies of services.


RBE No.193/2017
New Delhi,Dated:12-12-2017
The General Manager (P)
All Indian Railways
(As per standard mailing List)

Sub: Re-engagement of retired employees in exigencies of services.
Ref: No.E(NG)II/2007/RC-4/CORE/1 dated 16.10.2017 (RBE No.150/2017)

Attention is invited to Ministry of Railways (Railway Board)’s letter referred on the above subject. In partial modification of the instructions contained in letter ibid, Board have decided to enhance the maximum age limit for re-engagement of retired hands to 65 years from the exiting age limit of 62 years. further, it has also been decided to extend the validity of the scheme of re-engagement of retired employees, to 01.12.2019 as against the existing validity up to 14.09.2018

(Neeraj Kumar)
Director Estt.(N)-II
Railway Board.

Authority: http://www.indianrailways.gov.in

Thursday, November 16, 2017

All Updates on NAC Meeting And Minimum Pay Hike

The central government employees and pensioners have been waiting for a hike in minimum pay beyond the recommendation of the 7th Pay Commission or 7th CPC since July 2016. While the government has given hints about raising minimum pay beyond the recommendation of the 7th Pay Commission, there is little clarity on release of higher minimum pay. The National Anomaly Committee (NAC), which was formed to resolve all matters related to the implementation of the 7th Pay Commission‘s recommendations, is yet to submit its report on higher minimum pay. 
The NAS was supposed to hold a meeting in October on a hike in minimum pay beyond the recommendation of the 7th Pay Commission. However, the got postponed after the Election Commission announced dates for Assembly polls in Himachal Pradesh and Gujarat. The committee is likely to submit its report on a hike in minimum pay by December 15, said a Sen Times report. The report will be further examined by the Empowered Committee of Secretaries headed by Cabinet Secretary P K Sinha and the Department of Expenditure.

The government has reportedly asked the NAC to go ahead for a hike in basic pay beyond the recommendation of the 7th Pay Commission with fitment factor 3.00 times. The NAC may suggest hiking minimum pay to Rs 21,000 from Rs 18,000, which was recommended by the 7th Pay Commission and approved by the Cabinet. The central government employees, however, have been asking to raise minimum pay to Rs 26,000 and fitment factor 3.68 times from 2.57 times.While the NAC meeting might be held in December, the higher minimum pay would be released from April 2018. Several reports earlier suggested that the government would raise minimum pay beyond the recommendation of the 7th Pay Commission from January. However, the sources in the Finance Ministry said the higher minimum pay will come into effect by April next year at the latest. The NAC report on minimum pay hike would be available by that day (January) and its implementation would be done afterwards in due process, they said.
The government had approved a hike in salary and allowances as per the recommendations of the 7th Pay Commission in June 2016 and July 2017 respectively. The 7th Pay Commission had recommended a 14.27 percent hike in basic pay — the lowest in 70 years and raised minimum pay from Rs 7,000 to Rs 18,000 month.

Wednesday, November 1, 2017

Journey to Headquarters on LTC in respect of dependent family members of the Government servant

No. 31011/5/2015-Estt.A-IV
Government of India
Ministry of Personnel, Public Grievances & Pensions
Department of Personnel & Training
Establishment A-IV Desk
North Block New Delhi.
Dated October 31, 2017
Subject: Journey to Headquarters on LTC in respect of dependent family members of the Government servant – Clarification reg.
The undersigned is directed to refer to this Department’s O.M. No. 31011/14/86-Estt.(A-1V) dated 08.05.1987, which inter alia provides that the Govt. servant and the members of the family may claim LTC independently, however, reimbursement in such cases will be restricted to the actual distance travelled by the family or the distance between the headquarters/place of posting of the Government servant and the place visited/hometown, whichever is less.
2. Restriction of reimbursement to the distance from the Headquarter/place of posting creates an anomalous situation where the Government servant seeks to avail of LTC in respect of members of the family to the Headquarters/place of posting either from the Home town of the Government servant or from anywhere else. For illustration, a dependent child of a Govt. servant (posted in Delhi) staying and pursuing studies in Mumbai may visit a Government servant at his Headquarters/place of posting (i.e. Delhi) on LTC, however, reimbursement in such case shall be admissible for distance between the Headquarters and place of visit (which in this case is Headquarters itself), which shall be NIL in this case.
3. To resolve the issue, the matter has been considered by this Department in consultation with Joint Consultative Machinery – Staff side and Department of Expenditure. It is clarified that full reimbursement as per the entitlement of the Government servant shall be allowed for journey(s) performed on LTC by the family members from any place in India to Headquarters/place of posting of the Government servant and back. When such journey is performed from the Home Town, the LTC shall be counted against ‘Home Town’ LTC and in case the journey is from any other place in India, then it shall be counted against ‘Any place in India’ LTC.
4. The provisions of this OM (para 3) will have prospective effect.
5. Hindi version will follow.
(Surya Narayan Jha)
Under Secretary to the Government of India