The 8th Pay Commission is at work but revised pay has not yet come into effect for central government employees and pensioners. In many offices and pensioner groups, the talk has now turned to back pay, and families are asking how the 8th pay commission arrears calculation will be done once the decision is taken.
Arrears are the difference between the revised pay and the old pay, counted for each month that passes between the date the new pay is meant to apply and the date it actually starts reaching the bank account.
A delay in the report does not mean that this amount is lost. Employees and pensioners are waiting for the government to decide the date from which the new pay will count, and that decision will shape the size of the payment.
How the arrears sum is built
The calculation begins with the pay an employee is drawing under the old structure which is the basic pay that appears in the latest salary slip.
Next, the pay is fixed again under the new structure. For this, the government will apply the fitment factor, a multiplier that converts the old basic pay into the revised basic pay.
The revised pay is then compared with the old pay, and the difference for one month is worked out. This monthly difference is multiplied by the number of months from the effective date to the date on which the revised pay actually starts.
Pensioners are following the same logic on the pension amount. The old pension is compared with the revised pension, and the monthly gap is counted for the same months, so the method does not change for them.
What changes the final amount
The treatment of dearness allowance at the switch can also change the figure. Increments or promotions received in between will alter the old pay or the revised pay, so the monthly gap may be adjusted for individual employees.
On the other side, tax will trim the amount. Arrears are usually taxed in the year they are received, so a part of the payment may go to the Income Tax Department.
However, arrears are usually paid only after the government accepts the recommendations and issues orders. Until the notification is issued, the real amount and the timing of payment remain unknown.
