An increase in DA will directly affect PF, Gratuity, Dearness Allowance, Travel Allowance (TA) and HRA of central government employees.
Lakhs of central government employees are eagerly waiting for the announcement of hike in Dearness Allowance and it is expected that Prime Minister Narendra Modi-led government at the Centre would make an announcement in this regard from April 1, 2021. An increase in DA will directly affect Provident Fund (PF), Gratuity, Dearness Allowance, Travel Allowance (TA) and House Rent Allowance (HRA) of central government employees.
1. What is New Wage Code Bill 2021?
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Centre is planning to implement New Wage Code Bill 2021 from April 1, 2021. An announcement in this regard was made by Union Finance Minister Nirmala Sitharaman while presenting the Union Budget 2021 in the parliament. If the Centre decides to implement New Wage Code Bill, the Dearness Allowance (DA), House Rent Allowance (HRA) and Travel Allowance (TA), etc of central government employees won't be more than 50 per cent of their net CTC.
2. Change in PF contribution
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If the New Wage Code Bill 2021 comes into effect from April 1, the monthly PF contribution of employees will also get changed. It is to be noted that PF contribution of an employee is calculated from the basic salary plus Dearness Allowance (DA).
3. How will the new code affect Gratuity?
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The Gratuity contribution of an employee would also change as it is also calculated from one's basic salary and DA.
4. Change in HRA, DA, TA
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Under the New Wage Code, the allowance head is capped 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. It is to be noted that DA, TA, HRA, etc. fall under the allowance heads and these things will definitely get affected after the implementation of New Wage Code.
5. DA hike
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Several reports claim that the Centre is planning to increase the DA by 4% and an announcement of the hike in DA would be made before Holi.
