7th Pay Commission: Your Dearness Allowance (DA), HRA, Travel Allowance (TA) will change from April 2021 | Central Government Employees

7th Pay Commission DA, HRA, TA Allowances: After the implementation of this New Wage Act 2021, the minimum basic salary of an employee will become at least 50 per cent of the net CTC means one's monthly allowance won't go beyond 50 per cent of its net CTC.

7th Pay Commission DA, HRA, TA Allowances: New wage code will impact one's allowances like Dearness Allowance (DA), Travel Allowance (TA), House Rent Allowance (HRA), etc. Photo: Reuters

7th Pay Commission DA, HRA, TA Allowances: The Central Government is in full swing to implement New Wage Code Bill from 1st April 2021. After the implementation of this New Wage Act 2021, the minimum basic salary of an employee will become at least 50 per cent of the net CTC means one's monthly allowance won't go beyond 50 per cent of its net CTC. So, the new wage code will impact one's allowances like Dearness Allowance (DA), Travel Allowance (TA), House Rent Allowance (HRA), etc. This is because from 1st April 2021, if the New Wage Code gets implemented, then one's allowance can't go beyond 50 per cent of one's net CTC.

Speaking on how the New Wage Code will lead to change in the monthly allowances like DA, TA, HRA, etc. SEBI registered tax and investment expert Jitendra Solanki said, "The New Wage Code caps the allowance head at 50 per cent of the net monthly CTC, which means one's monthly allowance can't be more than 50 per cent of its net CTC. Since DA, TA, HRA, etc. fall under the allowance heads. They are bound to get affected once the New Wage Act 2021 gets implemented.

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Impact on PF, Gratuity

On how New Wage Code will impact a central government employee's Provident Fund (PF) and Gratuity; Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "Once the New Wage Code gets implemented, one's monthly PF and Gratuity will get changed too as the monthly PF and Gratuity contribution is calculated on monthly basic plus DA. Since, both DA and basic salary will change, one's PF and Gratuity contribution is bound to change after the New Wage Act 2021 implementation."

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