7th Pay Commission: Features & Benefits

24 Jan 2023  Read 218 Views

Many crave a government job not only for job security but also because of several other benefits such as paid holidays, fixed working hours, retirement & tax benefits and pay structure. Our Indian Government has been directly employing millions of citizens in various posts. So, for such purposes, the government has set up a separate pay commission since independence to monitor, review and recommend any possible modifications to the salary structure of government employees periodically, that is, after every 10 years. 

The said modifications cover not only the basic salary but even the allowances, benefits (either monetary or non-monetary), bonuses, amenities, etc. This article discusses the 7th pay commission, its pay matrix and the implementation of the 8th pay commission by next year if approved. So let’s get started.

What is a Pay Commission?

  • The Government of India set up the Pay Commission to recommend changes in the salary structure of central government employees. Until now, seven pay commissions have been set up. 

  • The present pay commission structure looking out for the salaries of government employees, including other benefits, is the 7th pay commission introduced in 2016 from the beginning of the year on 1st January after the recommendations were approved on 29th June 2016.

  • However, the salary revision of central government employees, which has been in discussion for a long-time now, is likely to be done in the next pay commission (the 8th pay commission).

  • The government believes that the salaries of government employees must be increased every year instead of every 10 years. Every decade, a new pay commission is formed to increase the salary of central government employees based on the fitment factor (Pay band and grade pay). 

  • This 10-year phenomenon deprives govt. employees of a lower level of a proper hike, unlike higher officers.

History of Central Pay Commission

The history dates back to the 1940s, with the establishment of the first Pay Commission in 1946. This Commission recommends the basic pay, allowances, and retirement benefits for Central Government employees & pensioners. The recommendations are implemented after every ten years, which significantly impacts these employees.

  • The 1st Pay Commission (1947-1958), recommended pay scales with a minimum salary of Rs. 55 and a maximum salary of Rs. 2000. There were 150-30 pay scales.

  • The 2nd Pay Commission (1959-1972), recommended pay scales with a minimum salary of Rs. 80 & a maximum salary of Rs. 3000. There were 500-140 pay scales.

  • The 3rd Pay Commission (1973-1986), recommended pay scales with a minimum salary of Rs. 196 & a maximum salary of Rs. 3500. There were 500-80 pay scales.

  • The 4th Pay Commission (1987-1995), recommended pay scales with a minimum salary of Rs. 750 & a maximum salary of Rs. 8000. The compression There were 153-36 pay scales.

  • The 5th Pay Commission (1996-2005), recommended pay scales with a minimum salary of Rs. 2550 & a maximum salary of Rs. 26000. There were 51-34 pay scales.

  • The 6th Pay Commission (2006-2015), recommended pay scales with a minimum salary of Rs. 7000 & a maximum salary of Rs. 80000. There were 35-19 pay scales and a 15-grade pay structure.

  • The 7th Pay Commission (2016-2025), recommended pay scales with a minimum salary of Rs. 18000 and a maximum salary of Rs. 250000. The pay matrix table was a simple pay scale table drawn with 19 stages, i.e.; 540 out of 760 cells.

  • The 8th Central Pay Commission pay scales is to be established from 2026-2035, the expected minimum and maximum salary, compression ratio, and pay matrix is not known. 

Let’s discuss the 7th Pay Commission in detail.

What is 7th Pay Commission?

In July 2016, AK Mathur headed the Seventh Pay Commission and submitted a report to Finance Minister Arun Jaitley which suggested a 23.55% hike in pay and allowances of central government employees. This means that If the 7th pay commission is implemented, government employees will receive benefits from pay hike etc. The GOI then planned to implement the 7th Pay Commission's recommendations by January 2017. Under 7th pay commission, salary is decided by pay matrix which is linked to the fitment factor. 

How is the salary computed as per the 7th pay commission?

There are several 7th Pay Commission calculators available to calculate the salary structure of the employees. One of the methods are:

  • Enter Basic Pay along with the Pay Band and Grade Pay (fitment factor)

  • Select transport allowance, and location with the current HRA percentage

  • Select ‘Calculate’

  • The above method will generate the revised salary structure in accordance with the 7th Pay Commission recommendations.

What are pay band and grade pay?

The pay band is a part of the salary process used to rank various jobs by education, responsibility, location, etc. Like in specific sectors, a minimum and the maximum salary range is decided in accordance with their work experience or work profile. Grade pay is a level that an employee holds on the scale of remunerations such as managerial pay grade, executive pay grade etc.

So, with around one year left for the 8th Pay Commission formation, the government may introduce a new formula for salary revision for employees or pensioners. This issue can also be discussed in the upcoming budget.

What is the basic pay in the 7th pay commission?

As per the pay matrix, the basic pay has been increased from Rs. 7000 to Rs. 18000 with maximum recommended pay fixed at ₹2,25,000 & for apex positions such as cabinet secretary and others in the same level, the pay begins at ₹2,50,000. (Refer to the table below for a better understanding)

Let’s read thoroughly about the pay matrix.

7th Pay Commission pay matrix

According to the 7th Pay Commission, The pay matrix had replaced the existing Grade pay and pay band system, as mentioned below in the table. However, this pay matrix is linked to the fitment factor. This pay matrix has been formed on the basis of levels which implies the hierarchy in simple words such as entry-level, officer level etc. The fitment factor (Pay band and grade pay) has changed from 2.57 to 2.67 to a particular level, and the pay hierarchy has also changed under this commission. Let’s check the pay matrix table for employees of the Central Government under 7th pay commission:

FYI: PB refers to the Pay Band & New levels in this table replace existing level of Grade Pay.

1. Existing PB-1 (Rs. 5200 to 20200)

Existing level of Grade Pay

1800

1900

2000

2400

2800

New Levels

1

2

3

4

5

1

18000 (Minimum pay to begin with)

19900

21700

25500

29200

2

18500

20500

22400

26300

30100

3

19100

21100

23100

27100

31000

4

19700

21700

23800

27900

31900

5

20300

22400

24500

28700

32900

6

20900

23100

25200

29600

33900

7

21500

23800

26000

30500

34900

8

22100

24500

26800

31400

35900

9

22800

25200

27600

32300

37000

10

23500

26000

28400

33300

38100

11

24200

26800

29300

34300

39200

12

24900

27600

30200

35300

40400

13

25600

28400

31100

36400

41600

14

26400

29300

32000

37500

42800

15

27200

30200

33000

38600

44100

16

28000

31100

34000

39800

45400

17

28800

32000

35000

41000

46800

18

29700

33000

36100

42200

48200

19

30600

34000

37200

43500

49600

20

31500

35000

38300

44800

51100

21

32400

36100

39400

46100

52600

22

33400

37200

40600

47500

54200

23

34400

38300

41800

48900

55800

24

35400

39400

43100

50400

57500

25

36500

40600

44400

51900

59200

26

37600

41800

45700

53500

61000

27

38700

43100

47100

55100

62800

28

39900

44400

48500

56800

64700

29

41100

45700

50000

58500

66600

30

42300

47100

51500

60300

68600

31

43600

48500

53000

62100

70700

32

44900

50000

54600

64000

72800

33

46200

51500

56200

65900

75000

34

47600

53000

57900

67900

77300

35

49000

54600

59600

69900

79600

36

50500

56200

61400

72000

82000

37

52000

57900

63200

74200

84500

38

53600

59600

65100

76400

87000

39

55200

61400

67100

78700

89600

40

56900

63200

69100

81100

92300

2. Existing PB-2 (Rs. 9300 to 34800)

Existing level of Grade Pay

4200

4600

4800

5400

New Levels

6

7

8

9

1

35400

44900

47600

53100

2

36500

46200

49000

54700

3

37600

47600

50500

56300

4

38700

49000

52000

58000

5

39900

50500

53600

59700

6

41100

52000

55200

61500

7

42300

53600

56900

63300

8

43600

55200

58600

65200

9

44900

56900

60400

67200

10

46200

58600

62200

69200

11

47600

60400

64100

71300

12

49000

62200

66000

73400

13

50500

64100

68000

75600

14

52000

66000

70000

77900

15

53600

68000

72100

80200

16

55200

70000

74300

82600

17

56900

72100

76500

85100

18

58600

74300

78800

87700

19

60400

76500

81200

90300

20

62200

78800

83600

93000

21

64100

81200

86100

95800

22

66000

83600

88700

98700

23

68000

86100

91400

101700

24

70000

88700

94100

104800

25

72100

91400

96900

107900

26

74300

94100

99800

111100

27

76500

96900

102800

114400

28

78800

99800

105900

117800

29

81200

102800

109100

121300

30

83600

105900

112400

124900

31

86100

109100

115800

128600

32

88700

112400

119300

132500

33

91400

115800

122900

136500

34

94100

119300

126600

140600

35

96900

122900

130400

144800

36

99800

126600

134300

149100

37

102800

130400

138300

153600

38

105900

134300

142400

158200

39

109100

138300

146700

162900

40

112400

142400

151100

151100

3. Existing PB-3 (Rs. 15600 to 39100)

Existing level of Grade Pay

5400

6600

7600

New Levels

10

11

12

1

56100

67700

78800

2

57800

69700

81200

3

59500

71800

83600

4

61300

74000

86100

5

63100

76200

88700

6

65000

78500

91400

7

67000

80900

94100

8

69000

83300

96900

9

71100

85800

99800

10

73200

88400

102800

11

75400

91100

105900

12

77700

93800

109100

13

80000

96600

112400

14

82400

99500

115800

15

84900

102500

119300

16

87400

105600

122900

17

90000

108800

126600

18

92700

112100

130400

19

95500

115500

134300

20

98400

119000

138300

21

101400

122600

142400

22

104400

126300

146700

23

107500

130100

151100

24

110700

134000

155600

25

114000

138000

160300

26

117400

142100

165100

27

120900

146400

170100

28

124500

150800

175200

29

128200

155300

180500

30

132000

160000

185900

31

136000

164800

191500

32

140100

169700

197200

33

144300

174800

203100

34

148600

180000

209200

35

153100

185400

-

36

157700

191000

-

37

162400

196700

-

38

167300

202600

-

39

172300

208700

-

40

177500

-

-

4. Existing PB-4 (Rs. 37400 to 67000)

Existing level of Grade Pay

8700

8900

10000

New Levels

13

13A

14

1

123100

131100

144200

2

126800

135000

148500

3

130600

139100

153000

4

134500

143300

157600

5

138500

147600

162300

6

142700

152000

167200

7

147000

156600

172200

8

151400

161300

177400

9

155900

166100

182700

10

160600

171100

188200

11

165400

176200

193800

12

170400

181500

199600

13

175500

186900

205600

14

180800

192500

211800

15

186200

198300

218200

16

191800

204200

-

17

197600

210300

 

18

203500

216600

-

19

209600

-

-

20

215900

-

-

5. These levels had no Grade Pay but only pay bands; these levels include HAG (Higher Administrative Grade), HAG+, Apex positions such as Cabinet Secretary, and Defence Chiefs levels.

Existing PB

Rs. 67000-79000

75500-80000

80000

90000

New Levels

15

16

17

18

1

182200

205400

225000

(Maximum recommended pay)

250000

(Pay begins for apex positions at this salary)

2

187700

211600

-

-

3

193300

217900

-

-

4

199100

224400

-

-

5

205100

-

-

-

6

211300

-

-

-

7

217600

-

-

-

8

224100

-

-

-

Will there be 8th Pay Commission?

The 8th Pay Commission is expected to come in 2024, which will review and make recommendations on the remuneration and benefits of government employees, including civil servants and military personnel. The recommendations of the 8th Pay Commission are expected to be implemented in 2026.

What the employees mainly expect from the 8th pay commission is that the 7th Pay Commission with an overall hike in pay scales for government employees. Plus this could include a 25% to 30% rise in basic pay for central government employees and a 25% increase for pensioners. The pay scale hike will help improve the standard of living for government employees and benefit the economy.

Important- This 8th Pay Commission will introduce a new pay matrix. This pay matrix will replace the existing pay matrix of the 7th pay commission and will simplify the pay structure. According to the reports, if the 8th pay commission is approved, government employees' minimum wage will increase from Rs 18,000 to Rs 26,000.

About the Author: Kakoli Nath | 137 Post(s)

Kakoli Nath is a legal Content Curator at Finology Legal who pursued BBA.LL.B (5 years integrated course) & she is a patent analyst. She has pursued advanced certification in Forensics Psychology and Criminal Profiling from IFS, Pune.

Liked What You Just Read? Share this Post:

Finology Blog / Constitutional Developments / 7th Pay Commission: Features & Benefits

Wanna Share your Views on this? Comment here: