Apr 18, 2016

Seventh Pay Commission: Government employees may have to shell out half of their increased salary

Mumbai, April 18: The government, it seems, is toying with the idea of encouraging its employees to invest part of their salaries. If recommendations of the seventh pay commission are anything to go by, the government is looking to use the fund for recapitalisation of the state-owned banks.

According to reports, the government is even ready to offer lucrative tax incentives, such as tax break or higher return, to get more employees of the high-income group to invest more fund. The Higher-income group employees may even be asked to part with half of their increased salary towards capitalisation of bonds. But this is still a proposal and no concrete decision has been taken as yet.

The officials of the Ministry of Finance had a detailed discussion over the issue last week, according to officials. The meeting was only about discussing the merits and demerits of the proposal and the matter is being looked after by the Committee of Secretaries. Various alternatives are also being discussed at the same time. Aayog

The idea behind this suggestion is to look for more resources for recapitalisation of public sector banks which are severely suffering with gross non-performing assets (NPAs) of Rs 3.61 trillion.

In the Budget 2016 proposal, the central government provided Rs 70,000 crore for the implementation of Seventh Pay Commission for 47 lakh government servants and 52 lakh pensioners. In total, the government will have to spend Rs 1.02 lakh crore for the implementation of the pay commission.

source - india. com