Sixth Pay Commission submits its Report

Exchange Rate for imported goods is Rs 74.03 Per Pound Sterling and Rs 51.22 Per Yen-Exchange Rate for export is Rs 72.45 Per Pound Sterling and Rs 49.94 Per Yen-Customs Non-Tariff Notification No.128 Sensex slips further and closes at 8773 100 per cent EOUs allowed to export non-basmati rice-DGFT Notification No.59 Customs duty of 5 per cent imposed on import of Pig Iron, spiegeleisen, semi-finished products, flat products & long products Import of Crude Soyabean Oil subjected to 20 per cent customs duty- no change in import duty on refined soyabean oil-Customs Tariff Notification No.122 Time-limit for filing refund of service tax extended to 6 months-Service Tax Notification No.32 Rahul Bajaj asks Industry to prepare for the worst Tariff Value for import of Brass Scrap is 3525 and for poppy seeds 5206-Customs Non-Tariff Notification No. 127 CBEC clarifies the entire amount of duty paid by the manufacturer, as shown in the invoice would be available as credit irrespective of the fact that subsequent to clearance of the goods, the price is reduced by way of discount or otherwise-Central Excise Circular No.877 Mandavariya (Kishangarh), District Ajmer notified for Unloading of imported goods and loading of export goods-Customs Non-Tariff Notification No.117 SC Ruling-the entitlement of benefit in terms of Section 32AB, Section 80HH and Section 80I of the Income Tax Act- conversion of Jumbo rolls of photographic films into small flats and rolls in the desired sizes amounted to manufacture/production-AIT-2008-413-SC SC Ruling-Whether any "gift" arose in terms of Section 2(xii) of the Gift-tax Act, 1958 on the allotment of rights issue by the appellant company to its shareholders vide Board's Resolution- Whether there was any element of "gift" as defined under Section 2(xii) in the appellant issuing Bonus shares in the ratio of 1:23-AIT-2008-412-SC DEPB benefit allowed on export of cement and steel-DGFT PN 108 exports of cement in all types and forms and primary steel products eligible for export incentives under Focus Market Scheme-DGFT Notification No.58 Import of Marble Tiles-DGFT Notification No.57 Clarification on setting up Duty Free Shops approved by FIPB-Customs Circular No.19 HC Ruling-Income Tax-"reserves" arising out of the acquisition of the business of Tata Cellular Limited could never have the character of "income" in the hands of the petitioners-pre-requisite condition contained in proviso to section 147 to enable the re-assessment to be opened after period of 4 years have elapsed have not been met-AIT-2008-410-HC HC Ruling-Central Excise- valuation of the goods for the purpose of excise duty and whether excise duty was chargeable under Section 4 or Section 4A of the Central Excise Act 1944-while construing rule 3, who are excluded are only the institutional or industrial consumers as explained in Rule 2A and the industrial or institutional consumers in terms of the proviso to rule 2(p) for the purpose of chapter-II are the same-If the person who purchase the prepacked commodity not directly from the manufacturer or packers, they are consumers and the declaration will be of no effect-AIT-2008-408-HC Government considering imposition of import duty on steel Bad News for Consulting Engineers- whether turnkey contract can be vivisected?- The conclusion in Daelim case on the point, prima facie, being not in accordance with law, matter goes to Larger Bench-AIT-2008-405-CESTAT Larger Bench of CESTAT rules Credit is admissible on an input service relating to the business-AIT-2008-407-CESTAT credit of the service tax paid on the outdoor catering (canteen) service is admissible as input service under Rule 2(l) of the Cenvat Credit Rules, 2004-AIT-2008-406-CESTAT The payment for use of "services for MTNL/other companies via the interconnect/port/access/toll by the assessee would not fall within the purview of payments as provided for under section 194J of the Act, so as to be eligible for tax deduction at source-The interconnect charges/port access charges cannot be regarded as fees for technical services-AIT-2008-404-HC Computation of Value under Section 14 for Levy of Export Duty - Customs Circular No. 18 Advance Ruling- Whether the service fee paid by the applicant to Intertek Testing Management Limited UK under Global Management Service Agreement is taxable as "Royalties & Fee for Technical Services" as per the provisions of Article 13 of DTAA between India & UK? 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Sixth Pay Commission submits its Report to FM

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NEW DELHI. The Sixth Pay Commission headed by Justice B N Srikrishna, has submitted its report to the government today and has recommended an average 40 per cent hike in salary for Central Government Babus.The recommendations of the commission, when accepted, would provide a bonanza to over 45 lakh central government employees. The recommendations would have an impact of substantial increase in salary.The actual payment to the Babus is anticipated before Diwali after fixing their salaries in new pay scales.The Pensioners will also get a substantial hike in their pensions.

The Government had hiked the salary of the President of India to Rs 1 lakh a month . Secretaries to the Government are expected to get less than the President’s salary.

Date of implementation Implementation of the revised pay scales to be done retrospectively from January 1, 2006. Recommendations relating to allowances to be implemented prospectively.

Running Pay Bands Introduction of running pay bands for all posts in the Government presently existing in scales below that of Rs.26,000 (fixed). Four distinct running pay bands being recommended - one running band each for all categories of employees in groups ‘B’ and ‘C’ (posts in the scale of Rs.5000-8000 have, as a result of delayering and elongation of certain scales, been placed in Group ‘B’) with 2 running pay bands for Group A posts. All posts presently in Group D, after retraining and multiskilling of the present incumbents, to be upgraded and placed in the lowest grade of pay band PB-1. The posts of Secretary to Government of India/equivalent and Cabinet Secretary/equivalent to be kept in distinct pay scales. A separate running pay band, designated as -1S scale, is not to be counted for any purpose as no future recruitment is to be made in this grade and all the present Group D employees not possessing the prescribed qualifications are to be retrained and thereafter upgraded and placed in the Group ‘C’ running pay band once they are suitably retrained.

Minimum and maximum salary Minimum salary at the entry level of PB-1 pay band to be Rs.6660 (Rs.4860 as pay in the pay band plus Rs.1800 as grade pay). Maximum salary at the level of Secretary/equivalent to be Rs.80000. The minimum: maximum ratio 1:12.

Grade Pay and Promotions in Running Pay Bands All the employees belonging to Groups ‘A’, ‘B’ , ‘C’ & ‘D’ to be placed in distinct running pay bands. Every post, barring that of Secretary/equivalent and Cabinet Secretary/equivalent to have a distinct grade pay attached to it. Grade pay (being a fixed amount attached to each post in the hierarchy) to determine the status of a post with (apart from the two apex scales of Secretary/equivalent and Cabinet Secretary/equivalent that do not carry any grade pay) a senior post being given higher grade pay. The total number of grades reduced to 20 spread across four distinct running pay bands; one Apex Scale and another grade for the post of Cabinet Secretary/equivalent as against 35 standard pay scales existing earlier. At the time of promotion from one post to another in the same running pay band, the grade pay attached to posts in different levels within the same running pay band to change. Additionally, increase in form of one increment to be given at the time of promotion. A person stagnating at the maximum of any pay band for more than one year continuously to be placed in the immediate next higher pay band without any change in the grade pay.

Annual increment Annual increments to be paid in form of two and half percent of the total of pay in the Pay Band and the corresponding grade pay. The date of annual increments, in all cases, to be first of July. Employees completing six months and above in the scale as on July 1 to be eligible.

Variable increments Another form of differential increments for Group A Pay Band PB-3, where annual increments in the band will vary depending upon the performance. Eighty percent or more employees in the grade to be allowed normal increment at the rate of 2.5% with the high performers (not exceeding 20 percent) during the year being allowed increment at the higher rate of 3.5%. Government advised to extend the scheme of variable increments in running pay bands PB 1 and PB 2.

Holistic nature of recommendations All the recommendations to be treated as an organic whole as partial implementation will bring in several anomalies and inconsistencies.

Selection for higher posts in future Certain posts in Senior Administrative Grade (SAG) and Higher Administrative Grade (HAG) requiring technical or specialized expertise and not encadred in any of the services to be opened up for being filled by suitable officers within the Government as well as by outsiders on contract. Shift from career based to post based selection in the higher echelons of Government in order to get the best domain based expertise.

Creation of posts in SAG & HAG Creation of additional posts in Senior Administrative Grade/equivalent/ higher grades in future to be strictly on functional considerations with such posts invariably being created outside the cadre to be filled by method of open selection.

Performance Related Incentive Scheme (PRIS) Introduction of PRIS in the Government under which employees to be eligible for pecuniary remuneration over and above the pay. PRIS to replace ad-hoc bonus scheme immediately and eventually replace PLB. PRIS to be budget neutral.

Special incentive for scientists, etc. System put in place for giving market driven compensation package to young scientists and posts requiring special expertise and professional skills.

Dearness allowance Base year of the Consumer Price Index (CPI) to be revised as frequently as feasible. Formulation of a separate index for Government employees suggested. National Statistical Commission to carry out this exercise.

Recommendations relating to Allowances Existing rates of most of the allowances to be doubled both in case of Defence Forces as well as civilian employees. Existing rates of HRA to be retained for A-1 cities with A, B-1 & B-2 cities being given this allowance at the rate of 20% and C/Unclassified cities being given the allowance at the rate of 10%. 11.26 CCA to be subsumed in Transport Allowance and the rates of this allowance to be increased by 4 times. Travel entitlements to be paid on actuals. Rates of Education allowance reimbursement to be raised from existing Rs.50 to Rs.1000 per child per month, subject to the maximum of two children. Hostel subsidy to be raised from existing Rs.300 p.m. to Rs.3000 p.m. Risk allowance to be replaced by risk insurance. All the fixed allowances made inflation proof with provisions of automatic revision whenever dearness allowance payable on revised pay bands goes up by 50%. Transport Allowance to be increased every year on the basis of the increase in the dearness allowance. Encashment of Earned Leave in case of Defence Forces personnel delinked from the number of years of service. All Defence Forces personnel to be eligible for leave encashment of upto 300 days at the time of retirement/discharge.A new medical insurance scheme recommended for Government employees. The scheme to be optional for existing Central Government employees and pensioners. New Government employees and pensioners to be compulsorily covered by the scheme.

Pension Fitment formula recommended for serving employees to be extended in case of existing pensioners/family pensioners. Rates of Constant Attendant Allowance to be increased by five times to Rs.3000 p.m. Pension to be paid at 50% of the average emoluments/last pay drawn (whichever is more beneficial) without linking it to 33 years of qualifying service for grant of full pension. A liberal severance package for employees leaving service between 15 to 20 years of service. Higher rates of pension for retirees and family pensioners on attaining the age of 80, 85, 90, 95 and 100 years. Revision of the commutation table suggested for commutation of pension. Framing of an appropriate insurance scheme suggested for meeting the OPD needs of pensioners in non-CGHS areas.

Advances A new mechanism for grant of advances under which an employee will take the advance from an approved bank and the Government will give an interest subsidy equal to two percentage points on the rate of interest being charged by the bank to the employee. Existing limits of various advances increased and provisions made for their automatic revision periodically.

Public holidays Continuation of five day week. Government offices to remain closed only on the three national holidays. All other gazetted holidays to be abolished and compensated by increasing the number of restricted holidays from two to eight days in a year.

Women employees Benefits like staggered working hours, special leave for child care, enhanced maternity leave of 180 days, better accommodation facilities in the form of working women’s hostels, etc. specifically for women employees.

Financial implications The recommendations contained in the Report to cost Rs.12561 crore in the year 2008-09. Savings of Rs.4586 crore likely to accrue on account of various measures suggested in the Report. The net financial implications of the recommendations contained in the Report estimated to be Rs.7975 crore for the year 2008-09. An additional, one-time burden of Rs.18060 crore on payment of arrears.