7th Pay Commission: Govt may bring allowances under income tax ambit
New Delhi/Bhubaneswar: Adding to the woes of the already upset and disappointed Central government employees, the Narendra Modi-led BJP government is likely to bring the revised allowances under 7th Pay Commission under the ambit of income tax.
If the revised allowances come under the ambit of Income tax, the central government employees will have to pay tax on the allowances they get under the 7th Pay Commission in 2018 fiscal.
The government has proposed imposition of income tax on the employees’ basic salary, bonus, and all other allowances in the Finance Bill 2017.
As per reports, this decision of the government came against the backdrop of the allegations that exempting the Central government employees from paying taxes on the basic salary is like discrimination against the private employees or others.
“We have been paying tax on allowances. Exemption was there only on a few allowances. Nothing can be worse for the central government employees than making them to pay tax on allowances that an employee gets for spending on works meant for the government only,” said an official of Central Income Tax department.
Soon after the approval of the recommendation of the 7th Pay Commission, employee unions raised their voices against the revised salary and allowances.
On the other hand, some financial experts are defending the government’s decision, and believe that tight fiscal situation forced the government to take such steps.
However, the employees are confident that the government will reconsider on the recommendations and also accept their proposal to pay the allowances and arrears with effect from July 2016 instead of July 2017.