Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. If total percentage of literate men is 35 of the total population, write a program to find the total number of illiterate men and women if the population of the town is 80,000. Every government employee receives DA which is based on a percentage of the basic salary. Thus, DA varies from employee to employee based on their presence in the urban, semi-urban or rural sector. Dearness Allowance is a major and progressive salary component for the employees of the Indian Government. From the year 1996, DA has been included to compensate for price rise or inflation in a particular financial year and hence it is revised twice every year, once in January and then in July. (VDA) applies to the employees of the Central Government. Write a program to calculate his gross salary. As per the recent announcement by the central Government in Budget 2018, the Dearness Allowance was hiked by 2%. remains fixed unless the government revises the basic minimum wages. File before 30th Nov to get assured rewards worth. The Dearness Allowance is a calculation on inflation and allowance paid to government employees, public sector employees and pensioners in India, Bangladesh and Pakistan. Note that salary here means basic pay, dearness allowance (if included), and commission on turnover based on fixed percentage. You will receive a call shortly from our customer support. Since, this allowance is related to the cost of living, the Dearness Allowance component differs for various employees based on their location. DA (Dearness Allowance) = 2% to 4% of Basic Salary. Dearness Allowance is planned as a percentage of an Indian citizen’s basic salary to lessen the force of inflation on people. In order to calculate the HRA, the salary is defined as the sum of the basic salary, dearness allowances and any other commissions. No, Dearness Allowance and House Rent Allowance are two different items of you Salary. This allowance is applicable to both employees in India and Bangladesh. Just upload your form 16, claim your deductions and get your acknowledgment number online. Since, this allowance is related to the cost of living, the Dearness Allowance component differs for various employees based on their location. No, the private sector employees in India are not entitled to receive Dearness Allowance as a part of their salary. The formula to calculate the dearness allowance was changed in 2006 by the Government. This Page is BLOCKED as it is using Iframes. Dearness allowance is calculated based on the inflation of the prices in the market. This merging results in a significant hike in the salary of the employees. Then there are another 55-lakh retired central government employees who are eligible for a pension. grants public sector pensioners and family pensioners D.A. Based on this figure, the DA of employees is revised and rolled out. Pay commissions take into account all the factors that feed into the calculation of salaries of personnel in the public sector. Allowances provided and the limits on it will differ from company to company, according to their policies. Dearness Allowance can be basically understood as a component of salary which is some fixed percentage of the basic salary, aimed at hedging the impact of inflation. As per an estimate, there are more than 50-lakh central government employees who receive the salary from the government. Basic salary is a fixed amount to be paid to an employee addition of any allowances or subtraction any deductions. Get more Personal Finance News and Business News on Zee Business. Pension revision for the retired employees of the public sector is done whenever a Pay Commission proposes a new salary structure. All public sector employers pay basic salaries to their employees according to the respective pay scale. Since the year 2006, the dearness allowance for employees from the public sector has been continuously growing. Dearness allowance is given to central government employees to help them bear their expenses keeping inflation in mind. Enter your number below. Ltd. ClearTax offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. That means the rate gets hiked by 6% for the central government employees. In January 2016, the Dearness allowance rates have reached at 125%. The Chief Minister of Odisha announced on February 14th, 2020 a 5% increase in Dearness Allowance (DA) for government employees. Dearness allowance is a cost of living adjustment allowance paid to the government employees and pensioners.It is one of the components of salary, and is counted as a fixed percentage of the person's basic salary.It is adjusted according to the inflationary trends to lessen the impact of inflation on government employees. In case employees are provided with rent free accommodation that is unfurnished wherein all prerequisites are met, Dearness allowance is a part of the salary to the extent wherein it forms a part of the retirement benefit salary. But there is no hard rule to say that the Basic + DA should be 70%. If you do not get commissions or dearness allowance then the house rent allowance will be 40 percent or 50 percent of your basic salary. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Which is combined with HRA. Dearness Allowance must not be confused with the HRA as they are two separate components and are treated differently for income tax. The arrears from the period of January 1, 2020 till June 30, 2021 will not be paid. D.A. The Pension Rule 50.A. In addition to this, the freezing of DA and DR till July 2021 will help the Centre around Rs.37,500 crore and the state Rs.82,500 crore and this amount will be used in helping the government tackle COVID-19 in the state as a stimulus package. Goverment put on Hold to Dearness Allowance hike due to Coronavirus impact. Every time the Pay Commission rolls out a new salary structure, the change is also reflected in the pension of the retired employee. 7th Pay Commission latest news today: For all central government employees waiting for the Dearness Allowance (DA) announcement for January to June 2021 period, there is a piece of good news. It is a fixed percentage of the basic salary aiming to hedge the impact of inflation. DA or dearness allowance is calculated as a specific percentage of the basic salary which is then added to the basic salary along with other components like HRA (House Rent Allowance) to make up the total salary of an employee of the government sector. So, while the cost of living keeps on rising, Dearness Allowance (DA) is paid by the government to its employees to offset the inflation impact and help them cope up with the rising prices. In fact, the law also requires to maintain the basic salary and dearness allowance in such proportion. ClearTax is a product by Defmacro Software Pvt. Currently, the dearness allowance makes up 50% of the basic salary. However, if a salaried employee is provided with an unfurnished accommodation which is rent-free, after the fulfilment of all the pre-requisites, D.A. With the new budget, came a lot of new advancements and developments. As per the latest updates, DA is fully taxable for salaried employees. Industrial Dearness Allowance (IDA) applies to the Public sector employees of Central Government. The government has recently announced through an office memorandum that it has decided to put the hikes on the dearness allowance (DA) on hold for pensioners and govt employees till the month of July 2021. It is revised every six months according to the Consumer Price Index to help offset the impact of rising levels of inflation. Save taxes with ClearTax by investing in tax saving mutual funds (ELSS) online. Industrial dearness allowance or IDA is the allowance applicable to employees of the public sector enterprises. Bonuses, overtime, dearness allowance, etc are not a part of basic pay. According to the Chief Minister, the hike would be effective from 1 January 2020. turns into that part of the salary which forms a component of retirement benefit salary. The memorandum also states that the beneficiaries will not receive any arrears from January 1st, 2020 to June 30th, 2021. If an employee does not receive a commission or a dearness allowance, then the HRA will be around 40% - 50% of his/her basic salary. However, a revision will be put in to effect on July 1st, 2021 and this will also take the previous hikes under consideration. Calculation of Dearness Allowance (DA) DA Calculation Formula for the Central Government Employees: Dearness Allowance (%) = [(Average of AICPI (With Base Year 2001 = 100) for the last 12 months – 115.76)/115.76] * 100 stands at 50%?of the basic salary of an employee. What came as a huge relief to most central government employees was the hike in the Dearness Allowance. The Odisha government also announced that the 10% arrears that are pending due to the recommendations of the 7th Pay Commission will be cleared. The current rate of Dearness allowance multiply with your basic salary is Dearness allowance. 7th Pay Commission 7th Pay Commission latest update: Big changes likely in Salary, DA, PF, Gratuity, travel allowance; know details here. Presently, DA is calculated as per the following formula: % of DA = {(Average of the All-India Consumer Price Index (Base year -2001 =100) for the last 12 months -115.76)/115.76} x 100, % of DA = {(Average of the All-India Consumer Price Index (Base year -2001 =100) for the last 3 months -126.33)/126.33} x 100. The Union Cabinet has recently announced a hike of 5% in the DA for employees and pensioners. Dearness Allowance can be basically understood as a component of salary which is some fixed percentage of the basic salary, aimed at hedging the impact of inflation. This came as a significant relief for all these beneficiaries as their Dearness Allowance was enhanced from 5% to 7%. It is applicable only to the public sector employees and pensioners. DA component of the salary is applicable to both employees in India and Bangladesh. Presently, it stands at 50% of the basic salary. How to Calculate Dearness Allowance for Central Government Employees and Pensioners after implementation of 7th Pay Commission and introduction new Consumer Price Index with base 2016=100? As per the 6 th pay commission the rate in 2015 January was 113% where the rate has increased to 119% in July 2015. Pensioners who are reemployed under the State government, Central government, an Autonomous or local body, or government undertakings, don’t have the eligibility to draw Dearness Allowance in cases where D.A. Since, DA is directly related to the cost of living, the DA component is different for different employees based on their location. Yes, D.A. The Income Tax Act mandates that tax liability for Dearness allowance will have to be declared in the filed returns. Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. This is supposed to be a great salary booster for employees since all other components of the salary are calculated as a percentage of the basic salary. According to the statement, when the government takes a decision to release the future instalments of the Dearness Allowance and the Dearness Relief which is due from 1 July 2021, the rates of the DA and the DR will be restored and will be subsumed in its cumulative revised rate which will be effective from 1 July 2021. If this is done, it would mean a significant salary hike for the employees as all other components of the salary are calculated based on the basic salary. It is the responsibility of the pay commissions to take into account every factor that helps with the calculation of the salaries. The memorandum is dated as on April 23th, 2020. Therefore, DA is also considered by the Pay Commissions while preparing the subsequent pay commission report. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing. It is announced twice a year, the first installment from January to June and the second from July to December. Please re-enter your phone number. This applies to both regular pension as well as family pension. Spearheaded by Indian Prime Minister, Narendra Modi, this move is going to benefit more than 50 lakh Central Government employees and approximately 55 lakh pensioners. is not granted to pensioners while they are staying in any place outside India during reemployment. One significant difference is that HRA applies to both private and public sector employees, while only public sector employees are entitled to DA. Same way, base index also remains fixed for a particular period. The mandate for the seeding of data with Aadhaar which was a pre-requisite for the purpose of releasing funds has also been relaxed by the Cabinet. In the meantime, employees from the public sector are ecstatic with anticipation of a merged DA which would mean a major hike in their salaries. Pensioners, in this case, are those retired employees of the central government who are eligible for either the individual or family pension from the government. The state government also announced that the additional instalments of the Dearness Allowance and Dearness Relief which was due from 1 July 2020 and 1 January 2021 will not be paid. Enter the yearly gross salary, and percentage of basic salary, HRA, dearness allowance(DA), conveyance allowance, medical allowance, special allowance, professional tax and bonus, the net salary calculator tool will automatically fetch you the detailed salary breakup and net salary … Likewise, if the Dearness Allowance is changed by a particular percentage, the pension of the retired personnel is revised accordingly. His dearness allowance is 40% of basic salary, and house rent allowance is 20% of basic salary. is part of a person's salary. Rates vary as per rural/urban areas etc. The demand has been raised with the Government, and a decision is soon expected on these lines. Pensioners who are staying abroad without reemployment are allowed to receive D.A. According to rules and regulations, if the percentage of dearness allowance crosses the 50% mark, then it mandatorily needs to be merged with the basic salary. Indian citizens may receive a basic salary or pension that is then … CAs, experts and businesses can get GST ready with ClearTax GST software & certification course. ClearTax can also help you in getting your business registered for Goods & Services Tax Law. Dearness Allowance is calculated as a percentage of an Indian citizen's basic salary to mitigate the impact of inflation on people. The salary is taken for the period the employee occupies the accommodation. Update: Dearness Allowance for Central Government Employees was continued to be calculated after implementation of 7th Pay Commission based on consumer price index with … One such important component is. Dearness Allowance must not be confused with the. Therefore, 10% of the employee’s salary will be provided under the Odisha Revised Scales of Pay Rules for the financial year 2019-2020. D.A. Dearness Allowance is cost of living adjustment allowance which the government pays to the employees of the public sector as well as pensioners of the same. Nearly 50 lakh government employees and 65 lakh pensioners will be benefited from this hike. is calculated as a percent of the basic salary. It is mandatory for you to contribute 12% of your basic … This has been a result of the constant enhancement in the DA ever year to offset the adverse effects of inflation. Dearness Allowance increased by 5% from 12% to 17% from July 2019. Yes, a salaried employee has to pay tax for Dearness Allowance since it is taxable for employees having a regular salary according to the latest tax updates. In order to lessen inflation effects on the salaries of these employees, the dearness allowance hike is usually offered to pensioners and staffers. is revised by a certain percentage, the pension of the retired employees undergoes revision accordingly. Dearness allowance is given to the employees as per their basic salary. In October 2019, the Government announced that DA would increase by 4% w.e.f. Ltd. All public sector employers pay basic salaries to their employees according to the respective pay scale. As of today, the DA is 50% of the employee’s basic salary after years of a steady increase in the DA percentage. Despite several measures by the government to control the rate of inflation, only partial success has been achieved because the prices move according to the market. The changed new figure that is received as a result of taking into consideration the increase or decrease in the Consumer Price Index, CPI, is termed as Variable dearness allowance. Dearness Allowance Calculations. This means, an employee receives a specific percentage of his/her original pension as D.A. The union cabinet had approved the hike of 4% in DA which resulted to the DA rising up to 21%. According to fresh media reports, the government has decided to increased dearness allowance by 4 percent, thus meaning, the dearness allowance of central employees will increase from 17 percent to 21 percent. (12% is the norm). According to various sources, 40% of the arrear amount between January 1st, 2016 and August 31st, 2017 was disbursed during the financial year 2017-2018. The union cabinet is expected to take a decision on this matter soon. He added that this has been one of the highest hikes in the past few years. If the decision is made in favour of the employees, it would significantly boost their salaries. The DA is (49000 x 12) /100. First is the consumer price index, second, the base index and third is the variable DA amount fixed by the government of India. COVID-19 cover with monthly payments. The third component remains fixed until the government revises the minimum wages. is granted to a re-employed pensioner depending on the limit of the last drawn emoluments. Normally, the Basic Salary is the actual salary and DA is taken as a percentage of this basic. 40% of basic and dearness allowance (50% in case of metro cities). If the employee has been provided with an unfurnished rent-free accommodation, it becomes that part of the salary up to which it forms the retirement benefit salary of the employee, provided that all other pre-conditions are met. Variable Dearness Allowance (VDA) applies to the employees of the Central Government. Since D.A. differs for the employees depending on their work location. The effective salary of government employees requires constant enhancement to help them cope up with the increasing prices. D.A. Latest News: Goverment put on Hold to Dearness Allowance hike due to Coronavirus impact. File Income tax returns for free in 7 minutes, Get expert help for tax filing or starting your business, Curated Mutual Funds & plans for tax savings, Complete solution for all your e-invoicing needs, I-T, e-TDS & Audit Software for CAs & Tax Professionals, Employee health plan, incl. House Rent Allowance HRA, which is part of the basic salary, is fully or partially exempt from taxes. Leaving so soon? Efiling Income Tax Returns(ITR) is made easy with ClearTax platform. Is Dearness Allowance same as House Rent Allowance ? One such important component is Dearness Allowance or DA. The current DA rate stands at 21% as part of pension and salary. Demands for merging the DA with the basic salary have been with the government for quite some time. ClearTax serves 2.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India. Dearness Allowance too, is taken into account for rolling out the next pay commission report. It solely depends on employers. As a rule, it is practice to merge the DA with the basic salary once the DA percentage breaches the 50% mark. Ever since the revision of the calculation formula, the DA for public sector and central government employees has been consistently rising. This also includes the periodic reviewing and updating the multiplication factor for calculation of DA. Currently, D.A. Request received - loud & clear!Returning you to where you were... (You can save searches, track your apps & save plenty of time!). HRA is applicable to both employees from the private sector as well as the public sector whereas DA is majorly applicable to employees working in the public sector. The calculation of DA is based on the percentage of basic salary. According to the proposed changes, this hike is most likely to work in the favor of more than 48.41 lakh central employees and 61.17 lakh pensioners and staffers. Pensioner’s Dearness Allowance is computed on the basic pension of an employee without commutation. In 2018 witnessed a lot of changes in the realm of taxation. The Central government has also frozen the hike in inflation-linked allowance. Only the CPI or Consumer Price Index changes every month and affects the overall value of the variable dearness allowance. VDA in itself is dependant on three different components as given below. Tip. (IDA) applies to the Public sector employees of Central Government. Basic Salary – Definition. is directly connected to the cost of living, it is not the same for all employees and varies for employees working in rural, urban, and semi-urban areas. This number appears incorrect / invalid. in order to compensate for inflation or price rise. The Industrial Dearness Allowance for public sector employees undergoes quarterly revision depending on the Consumer Price Index to help offset the impact of rising levels of inflation. 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