A complete reference blog for Indian Government Employees

Thursday 5 February 2015

Retiring soon? Some financially sound options to keep yourself occupied

Retiring soon? Some financially sound options to keep yourself occupied
– by Priya Sunder

When we think of retirement, we think of an unfettered life — free from the constraints of a clock and being subservient to people at work. A happy retirement is about having a fulfilling life for the thirty or so years that you will live after you retire. It’s not just about keeping yourself occupied but, if possible, making it a financially sound option. As you start thinking about your retirement plans, here are some ideas that you may find useful.

* If you have always wanted to be the captain of your ship, now is the time to make that dream come true. You can turn your interest or passion into a business. One of our clients recently left a senior management position in a large company to start an accounting partnership firm. Another good friend has set up a firm that makes and sells traditional Indian games and toys. You can even set up a small scale manufacturing unit from home and retail your wares through the myriad e-commerce sites. The large reach and low overhead costs make this an attractive proposition.

* Retired professionals are a treasure trove of knowledge in their respective fields. Consulting is, hence, a favourite occupation among new retirees. Many people undertake assignments with their previous employers as a stepping stone into the field. Consulting offers you the flexibility to work at your own pace and can be lucrative once you have built a reputation and acquired good clientele.

* If you worked in a bank or in other parts of the financial services industry, you may already have the expertise needed to be an independent financial adviser. You can qualify yourself with the necessary licences and become an adviser and distributor of financial products and services. It will not only enable you to interact with various people, but also give you the satisfaction of helping people meet their life goals.

* When my aunt retired as the creative director of a leading advertising company, she combined her writing skills with her passion for exploring new places to become a travel writer. She visited the most delightful places in the world and couldn’t believe magazines were paying her for having the time of her life. If you passionate about something, think of ways to leverage it to make it a rewarding career.

* One of my retired customers pursued his life-long desire to be an educator. He is now a visiting professor at one of the leading business schools in Bengaluru. If you have retired as a teacher, you can keep busy by coaching students privately. If you are a good teacher, you can design curriculums and test papers that you could market online. With advanced technology, such as Skype and webcams, you can communicate with students from anywhere in the world.

* If generating income is not your main objective, use your expertise and wisdom to volunteer with non-profit organisations. Several charitable organisations need expert help to further their causes. Not only will you get recognition, but also feel a sense of accomplishment and purpose.

* Whether it is Facebook, Twitter, blogs or other websites, engaging with social media encourages networking. Blogging can be a good way to express your opinions or interests. You can create one too. If the blog becomes popular, it can generate healthy revenues.

Spending your time productively is crucial to a happy retirement. An active mind also ensures your physical and mental wellbeing. It is important to write the next chapter of your life before you close the current one. You will have then turned your silver years into the golden years of your life.

(The author is Director, PeakAlpha Investment Services)

Source :ET
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Proposal to discontinue exemption of Rs. 1.5 lakh available for Savings under Section 80C

Proposal to discontinue exemption of Rs. 1.5 lakh available for Savings under Section 80C

It is learnt that Finance Ministry is considering to put up a proposal for discontinuing Exemption of Rs. 1.5 lakh presently available under Section 80C for Savings and Insurnace such as premium paid, investment in NSS, Mutual funds, Pension funds etc. Alternatively, the basic income tax exemption limit of Rs. 2.5 lakh would be raised to Rs. 4 lakh. Reasons behind such a bold move by Finance Ministry as per sources are:

1. Income Tax Department could not verify whether the Investments declared to be have been made to avail exemption under Section 80 C were actually made

2. To make Income Tax Law simple by raising basic Income Tax Exemption Limit and avoid complexities involved in providing Income Tax Exemption to promote savings.

As per Finance Ministry proposals, the current system allows individuals to avail of the Section 80C benefit without having made the required investments.

Most of the tax returns by individuals are processed by what is called a ‘summary assessment’, under which an adjustment in the reported income is made only in cases of arithmetic error or of a wrong claim that is apparent from the return filed. Officials do not ask questions or insist on proof of investment while processing returns. Only in cases of ‘scrutiny assessment’ and ‘assessment of income that has earlier escaped assessment’, which are done in very few cases, more information or evidence is sought to ensure that the reported income is correct.

Even in the case of salaried individuals, where the employer may insist on proof of investments, the tax authorities do not. Besides, if a salaried individual wrongly claims in his return that Section 80C investments have been made, the TDS by the employer and paid to the department is refunded by the tax authorities without asking any questions. In the case of self-employed, there is no check either by the employer or the taxman.

So the ministry feels that any individual who is actually interested in saving would anyway do it and there is really no need to incentivise the same through the tax policy.

Savings entitled to tax benefit under Section 80C include payments towards life insurance, deferred annuity, provident funds, National Savings Certificates, unit-linked investment plans of LIC Mutual Fund, pension funds set up by mutual funds, equity-linked savings plans, deposits with National Housing Bank and tuition free paid for education of children.

Source: Financial Express
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Budget 2015 India: Wish List of Salaried Employees on Income Tax

Budget 2015 India:  Wish List of Salaried Employees on Income Tax
Budget 2015 may be yet another one, but financial comfort and rising hopes on growing Indian Economy, may provide room for the finance minister Mr. Arun Jaitley to announce more exemptions or reliefs in the income tax front in this Budget. More than additional exemptions these measures can be called as updating of Income Tax Exemption limit for various allowances which were fixed very long ago which unrealistic to present date.

Budget 2015 Wish List of Salaried Employees on Income Tax :

Basic Income Tax Exemption Limit :
Increase of Basic Income Tax Exemption Limit to Rs. 3 lakhs to meet out inflationary Trend.

Transport Allowance:
Transport Allowance is exempted to an extent of Rs. 800 per month. However, the lowest amount of Transport Allowance of Rs. 400 (plus dearness allowance) received by the employees in the Group C and MTS cadres itself is taxable. So there is a very high need for increasing exemption limit for Transport Allowance payable Government Employees.

Children Education Allowance:
Children Education Allowance is the other allowance, which is exempted to an extent of Rs. 100 per month. Of course this exemption limit was decided more than a decade ago when tuition fees of Rs. 100 was reimbursed to Central Government Employees. On implementation of sixth Pay commission recommendations, Children Education Allowance has been raised to Rs. 1000 and incremented when DA crosses 50% each time. So, there is no point in keeping the slab on IT Exemption for CEA at this low level. It is widely expected that Childen Education Allowance is to be fully exempted from Income Tax.

Medical Reimbursement by Employer:
The present Exemption Limit of Rs.15,000 as far as medical reimbursement is concerned provided by an employer needs to revised to Rs. 50,000 considering the cost of medical treatment presently.

Health Insurance premium under Section 80 D:
Salaried Employees also expect an increase of exemption limit for Health Insurance Premium paid to Rs. 50, 000 from the current level of Rs. 35,000 (Rs. 15,000 for family and Rs. 20,000 to Parents)

Re-Introduction of Standard Deduction:
As of now, Salaried Employees are treated at part with Tax Payers who are self employed and doing business of their own, as far as Income Tax is concerned. But this was not the case 10 years ago (until 2004-05). Just like Self Employed and Business related tax payers enjoy deduction of expenses made from the income, a fixed amount was exempted from total income of Salaried Employees which was termed as Standard Deduction. One of the expectations of Salaried Employees now is re-introduction of Standard Deduction for their income tax assessment.

Exemption Limit of Rs. 1.5 lakh for Savings under Section 80 C:
Also, Salaried Employees feel that Exemption of Rs. 1.5 lakh available for Savings and Insurance Insruments as wells as retirement plans is too low considering the number of investments allowed to be exempted under this category. It is expected that this Exemption limit has to be increased to Rs. 2 lakh at least.

Exemption limit on Rent Paid when no HRA is received :
Further, Rent paid by an individual is exempted now to an extent of Rs. 2000 per month if no House Rent Allowance is received. This limit was fixed in the year 1998. Needless to say house rent cost has increased enormously since 1998. So, this exemption limit needs immediate revision to match the current rental cost.
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Highlights of the 7th Central Pay Commission

Highlights of the 7th Central Pay Commission

1. Pay scales are calculated on the basis of pay drawn pay in pay band + GP + 100% DA by employee as on 01-01-2014.
2. 7th CPC report should be implemented w.e.f. 01-01-2014.
3. Scrap New Pension Scheme and cover all employees under Old Pension and Family Pension Scheme.

4. JCM has proposed minimum wage for MTS (Skilled) Rs.26,000 p.m.

5. Ratio of minimum and maximum wage should be 1:8.

6. General formula for determination of pay scale based on minimum living wage demanded for MTS is pay in PB+GP x 3.7

7. Annual rate of increment @ 5% of the pay.

8. Fixation of pay on promotion = 2 increments and difference of pay between present and promotional posts (minimum Rs.3000).

9. The pay structure demanded is as under:-
Existing Proposed (in Rs.)
PB-1 GP Rs.1800 – 26,000
PB-1 GP Rs.1900  – 33,000
PB-1 GP Rs.2000  – 33,000
PB-1 GP Rs. 2400 – 46,000
PB-1 GP Rs.2800 – 46,000
PB-2 GP Rs.4200  – 56,000
PB-2 GP Rs.4600 – 74,000
PB-2 GP Rs.4800 – 74,000
PB-2 GP Rs.5400  – 78,000
PB-3 GP 5400 – 88,000
PB-3 GP 6600 – 1,02,000
PB-3 GP 7600 – 1,20,000
PB-4 GP 8900 – 1,48,000
P4-4 GP 10000 – 1,62,000
HAG – 1,93,000
Apex Scale – 2,13,000
Cabinet Secretary – 2,40,000

10. Dearness Allowances on the basis of 12 monthly average of CPI, Payment on 1st Jan and 1st July every year.

11. Overtime Allowances on the basis of total Pay+DA+Full TA.

12 Liabilities of all Government dues of persons died in harness be waived.

13. Transfer Policy – Group `C and `D Staff should not be transferred. DoPT should issue clear cut guideline as per 5th CPC recommendation. Govt. should from a Transfer Policy in each department for transferring on mutual basis on promotion. Any order issued in violation of policy framed be cancelled by head of department on representation.

14. Transport Allowance –
X Class Cities Y Class Cities
Pay up to Rs.75,000 Rs.7500 + DA Rs.3750 + DA
Pay above Rs.75,000 Rs.6500 + DA Rs.3500 + DA

13. Deputation Allowance double the rates and should be paid 10% of the pay at same station and 20% of the pay at outside station.

14. Classification of the post should be executive and non-executive instead of present Group A, B, C.

15. Special Pay which was replaced with SPL/Allowance by 4th CPC be bring back to curtail pay scales.

16. Scrap downsizing, outsourcing and contracting of govt. jobs.

17. Regularize all casual labour and count their entire service after first two year, as a regular service for pension and all other benefits. They should not be thrown out by engaging contractors workers.

18. The present MACPs Scheme be replaced by giving five promotion after completion of 8, 15, 21, 26 and 30 year of service with benefits of stepping up of pay with junior.

19. PLB being bilateral agreement, it should be out of 7th CPC perview.

20. Housing facility:-

(a) To achieve 70% houses in Delhi and 40% in all other towns to take lease accommodation and allot to the govt. employees.
(b) Land and building acquired by it department may be used for constructing houses for govt. employees.

21. House Building Allowance :-
(a) Simplify the procedure of HBA
(b) Entitle to purchase second and used houses

22. Common Category – Equal Pay for similar nature of work be provided.

23. CP appointment – remove ceiling of 5% and give appointment within Three months.

24. Traveling Allowance:-
‘A1’ and ‘A’ Class Cities Other Cities
A. Executives Rs.5000+DA per day Rs.3500+DA per day
B. Non-Executives Rs.4000+DA per day Rs.2500+DA per day

25. Composite Transfer Grant :-
Executive Class 6000 kg by Goods Train/ Rate per km by road 8 Wheeler Wagon Rs.50+DA(Rs.1 per kg and single container per km)
Non-Executive Class 3000 kg – do – -do-

26. Children Education Allowance should be allowed up to Graduate, Post Graduate, and all Professional Courses. Allow any two children for Children Education Allowance.

27. Fixation of pay on promotion – two increments in feeder grade with minimum benefit of Rs.3000.

28. House Rent Allowance
X Class Cities 60%
Other Classified Cities 40%
Unclassified Locations 20%

29. City Allowance
`X’ Class Cities `Y’ Class Cities
A. Pay up to Rs.50,000 10% 5%
B. Pay above Rs.50,000 6% minimum Rs 5000 3% minimum Rs.2500

30. Patient Care Allowance to all para-medical and staff working in hospitals.

31. All allowances to be increased by three times.

32. NE Region benefits – Payment of Special Duty Allowance @ 37.5 of pay.

33. Training:- Sufficient budget for in-service training.

34. Leave Entitlement
 (i) Increase Casual Leave 08 to 12 days & 10 days to 15 days.
(ii) Declare May Day as National Holiday
(iii) In case of Hospital Leave, remove the ceiling of maximum 24 months leave and 120 days full payment and remaining half payment.
(iv) Allow accumulation of 400 days Earned Leave
(v) Allow encashment of 50% leave while in service at the credit after 20 years Qualifying Service.
(vi) National Holiday Allowance (NHA) – Minimum one day salary and eligibility criteria to be removed for all Non Executive Staff.
(vii) Permit encashment of Half Pay Leave.
(viii) Increase Maternity Leave to 240 days to female employees & increase 30 days Paternity Leave to male employees.

35. LTC – Leave Travel Concession
(a) Permission to travel by air within and outside the NE Region.
(b) To increase the periodicity once in a two year.
(c) One visit outside country in a lifetime

36. Income Tax:
(i) Allow 30% standard deduction to salaried employees.
(ii) Exempt all allowances.
(iii) Raise the ceiling limit as under:
(a) General – 2 Lakh to 5 Lakh
(b) Sr. Citizen – 2.5 Lakh to 7 Lakh
(c) Sr. Citizen above 80 years of age – 5 Lakh to 10 Lakh
(iv) No Income Tax on pension and family pension and Dearness Relief.

35. (a) Effective grievance handling machinery for all non-executive staff.
(b) Spot settlement
(c) Maintain schedule of three meetings in a year
(d) Department Council be revived at all levels
(e) Arbitration Award be implemented within six month, if not be discussed with Staff Side before rejection for finding out some modified form of agreement.

36. Appoint Arbitrator for shorting all pending anomalies of the 6th CPC.

37. Date of Increment – 1st January and 1st July every year. In case of employees retiring on 31st December and 30th June, they should be given one increment on last day of service, i.e. 31st December and 30th June, and their retirements benefits should be calculated by adding the same.

38. General Insurance: Active Insurance Scheme covering risk upto Rs. 7,50,000/- to Non Executive & Rs. 3,50,000/- to Skilled staff by monthly contribution of Rs. 750/- & Rs. 350/- respectively.

39. Point to point fixation of pay.

40. Extra benefits to Women employees (i) 30% reservation for women.
(ii) Posting of husband and wife at same station.
(iii) One month special rest for chronic disease
(iv) Conversion of Child Care Leave into Family Care Leave
(v) Flexi time

41. Gratuity:
Existing ceiling of 16 ½ months be removed and Gratuity be paid @ half month salary for every year of qualifying service.
Remove ceiling limit of Rs.10 Lakh for Gratuity.

42. Pension:
(i) Pension @ 67% of Last Pay Drawn (LPD) instead of 50% presently.
(ii) Pension after 10 years of qualifying service in case of resignation.
(iii) Increase pension age-based as under:
65 years – 70% of LPD
70 years – 75% of LPD
75 years – 80% of LPD
80 years – 85% of LPD
85 years – 90% of LPD
90 years – 100% of LPD
(iv) Parity of pension to retirees before 1.1.2006.
(v) Enhanced family pension should be same in case of death in harness and normal death.
(vi) After 10 years, family pension should be 50% of LPD.
(vii) Family pension to son upto the age of 28 years looking to the recruitment age.
(viii) Fixed Medical Allowance (FMA) @ Rs.2500/- per month.
(ix) Extend medical facilities to parents also.
(x) HRA to pensioners.
(xi) Improvement in ex-gratia pension to CPF/SRPF retirees up to 1/3rd of full pension.
Source: NC JCM Staff Side
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Highlights of the 6th Central Pay Commission

Highlights of the 6th Central Pay Commission

The Union Cabinet today gave its approval for implementation of the recommendations of the Sixth Central Pay Commission. The revised pay scales will come into effect from 1/1/2006 and revised rates of allowances from 1/9/2008. The Cabinet has also decided that arrears will be paid in cash in two instalments – first instalment of 40% during the current year (2008-09) and the remaining 60% in the next financial year (2009-10).

2. The Cabinet has broadly accepted the recommendations of Sixth CPC with some modifications in the wake of representations received from various sections/Associations of Central Government employees. The new system of four Pay Bands with 20 Grade Pays recommended by the Commission has been accepted with some minor modifications.

3. The minimum Basic Pay for a Government servant has been increased to Rs.7000 from Rs.6660 recommended by the Sixth CPC. Consequently, the total emoluments of an employee at the lowest level will exceed Rs.10,000 p.m., including allowances.

4. The other highlights of the Cabinet decision covering all Government employees including the Defence Forces are:-
(i) Enhancement in the fitment in revised pay bands, which was recommended by the Sixth CPC to be based on multiplication factor of 1.74 to 1.86. This would result in increased emoluments for Government employees.

(ii) Increase in the rate of annual increment from 2.5% to 3%.

(iii) Removal of Campus restriction for grant of Transport Allowance.

(iv) Increase in Transport Allowance at the lowest level to Rs.600 (from Rs.400 in A-1/A class cities recommended by the Sixth CPC) and Rs.400 (from Rs.300 in other cities recommended by the Sixth CPC).

(v) At least three promotions have been assured for all Defence Forces’ personnel and civilian employees under the modified Assured Career Progression (ACP) Scheme. While the civilians would get it after 10, 20 and 30 years of service, the Defence Forces Jawans would get ACP in 8, 16 and 24 years.
5. For the Armed Forces personnel, the Commission, for the first time recommended a Military Service Pay (MSP). The Cabinet has increased the rate of MSP for PBORs to Rs.2000 from Rs.1000 recommended by the Commission. The Officers of the Defence Forces would get an MSP of Rs.6000 over and above their Pay.

6. The middle level officers of the Defence Forces namely Colonels and Brigadiers have been placed in the highest Pay Band of PB-4.

7. Senior Lt. Generals overlooked for promotion as Army Commanders due to lack of residual service would now get the grade of Army Commander (Secretary’s grade). In the case of existing Major Generals/Lt. Generals, MSP will be taken into account notionally for fixation of pay on 1/1/2006.

8. As replacement of the pay scale of Rs.24050-26000, a separate pay scale has been carved for DGPs, PCCFs, GM (Railways), members of the Boards of Income Tax, Customs & Central Excise, Postal and Ordnance Factories, among others, who were in this pre-revised scale. This would take them to the level of Rs.80000 in two years as against three years in the pre-revised scale.

9. Further, the IPS Pay Rules and the Indian Forest Service Pay Rules will be appropriately modified to provide in each State cadre one post of DGP and one post of PCCF at the apex level of Rs.80000 for heading their respective Forces.

10. Middle level Police and Civilian officers i.e. DIGs, Conservator of Forests, Scientists E & F, Superintending Engineers, Directors, Additional Commissioners of Income Tax and Central Excise and posts in equivalent grades have also been placed in PB-4.

11. Other salient decisions taken by the Cabinet are:-
(i) The lower limits of Disability Pension for Defence personnel to be doubled from Rs.1550 to Rs.3100. War Disability Pension to be granted at 60%;

(ii) The rates of Special Forces Allowance for Army and Air Force to be equated with navy’s Marine Commando Allowance;

(iii) For the officers of Central Para Military Forces, all the posts of Additional DIG upgraded to DIG level by the Pay Commission to continue to be manned by the cadre officers of CPMFs;

(iv) For the Railway employees who are in receipt of Running Allowance, this allowance will be taken into account while fixing their pay in revised pay bands;

(v) Government has continued the present position of granting Group A scale to Group B officers after 4 years of service and these officers would be placed in PB-3 instead of PB-2 recommended by the Sixth CPC. This would benefit Group B officers of the Railways, Accounts Services, CSS, CSSS and DANICS & DANIPS.

(vi) For Doctors, the Cabinet has approved promotions under the Dynamic ACP Scheme upto Senior Administrative Grade (Joint Secretary level) for Doctors with 20 years of service. Counting of Dearness Allowance (DA) on Non-Practicing Allowance (NPA) as on 01.01.2006 for fixing their pay in revised pay bands has also been approved;

(vii) For the scientists, continuation of the existing system of grant of Special Pay of Rs.2000 p.m. to Scientists G on promotion and doubling of the amount to Rs.4000 p.m. in Departments of Space and Atomic Energy and Defence Research & Development Organisation (DRDO) has been recommended.
12. The financial implications in 2008-09 on account of the implementation of the recommendations of the Sixth Central Pay Commission as modified by the Cabinet will be around Rs.15700 crore on the Central Budget and Rs.6400 crore on the Railway Budget.

Source : PTI

KEY REPORTS OF THE CENTRAL PAY COMMISSION:

Leave Travel Concession (LTC) Central Government employees should be allowed to travel to their home town along with their families on three occasions in a block of four years and to any place in India on the fourth occasion. This facility shall be available to the Government officers only for the first two blocks of four years applicable after joining the Government for the first time.

The blocks of 4 years shall apply with reference to the initial date of joining the Government even though the employee changes the job within Government subsequently. The existing blocks will remain the same but the entitlements of the new recruit will be different in the first eight years of service.

All other provisions concerning frequency of travel under LTC are to be retained. (Para No. 4.3.5) Travel entitlements, whether for the purpose of official tour/transfer or LTC, should be same but no daily allowance will be payable for travel on LTC.

Further, the facility shall be admissible only in respect of journeys performed in vehicles operated by the Government or any Corporation in the public sector run by the Central or State Government or a local body. (Para No. 4.3.6) Parents and/or step parents (stepmother and stepfather) who are wholly dependent on the Government employee shall be included in the definition of family for the purpose of LTC irrespective of whether they are residing with the Government employee or not. The definition of dependency is being linked to the minimum family pension for all purposes. Accordingly, all parents and/or step parents whose total income from all sources is less than the minimum family pension prescribed in Central Government and dearness relief thereon would be included in the definition of family for this purpose.

The extant conditions in respect of other relations included in the family including married /divorced /abandoned /separated /widowed daughters shall continue without any change. (Para No. 4.3.7) While encashment of Earned Leave upto 10 days along with LTC to the extent of total of 60 days may be continued, the leave encashed at the time of availing LTC should not be deducted from the maximum amount of Earned Leave encashable at the time of retirement. Consequently, the employees would be eligible to encash 300 days of Earned Leave at the time of their retirement, even though they may have encashed Earned Leave of upto 60 days during their career while availing LTC, whether to their home town or to any place in India.

Insofar as Railways is concerned, the employees shall be allowed to avail of this encashment at the time of availing of passes for a maximum of 60 days in the entire career subject to the condition that successive encashment cannot be made before a minimum period of two years has elapsed. (Para No. 4.3.8)

Recommendations of Sixth CPC which will be examined separately List of Recommendations

1.Recommendation related to Bonus and Over Time Allowance.

2.Recommendation related to General Provident Fund for Central Government employees and Central Government Employees Group Insurance Scheme.

3.Recommendation related to lateral shift of Defence personnel to Central Para Military Forces.

4.Introduction of Health Insurance Scheme for Central Government employees and pensioners.

5.Upgradation of the posts of Additional Deputy Comptroller & Auditor General of India, Members, CBEC and Members, CBDT to the Apex Scale of Rs.80,000 (fixed).

6.Merger of all accounts services.

7.Corporatization of Indian Railways.

8.Abolition of Indian Telecom Service and Telecom Commission.

9.Outsourcing the process of commutation of pension to a PSU Bank/Institution.

10.Up-gradation of the post of Director, Indira Gandhi National Forest Academy in Ministry of Environment & Forests to the higher pre-revised grade of Rs.26000 (fixed)

Source: 90paisa.blogspot.in
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5 Percent DA July 2019 Hike Order - Grant of Dearness Allowance to Central Government employees

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