NEW DELHI: The Centre on Tuesday announced the implementation of the much awaited pay revision for more than five lakh teachers in the universities and colleges
across the country.
Union Minister for Human Resource Development Arjun Singh said that all the recommendations of the Chadha committee have been accepted and they would be implemented with effect from January 1, 2006.
The UGC pay review committee headed by Prof G K Chadha had recommended 70 percent hike in pay and other emoluments for teachers in the universities and colleges.
The pay hike package would also be valid for state-run colleges and universities recognised by the UGC.
While the revision of pay will take effect from January 1, 2006, the allowances (except DA) and advance increments shall take effect from September 1, 2008.
Making a statement in the Lok Sabha, Minister of State for HRD Purandeswari said “We have begun a process of restoring the dignity and pride in being associated with the teaching profession.’’ According to the revised pay scales approved by the government, there shall be only three designations in respect of teachers in universities and colleges, namely, Assistant Professors, Associate Professors and Professors.
In place of “Grade Pay” as applicable to Central Government employees, the term “Academic Grade Pay” (AGP) shall be used for the teachers and equivalent positions.
Different Grade Pays of Rs 6,000, Rs 7,000, Rs 8,000, Rs 9,000, Rs 10,00 and Rs 12,000 have been approved as AGP for teachers and equivalent positions.
Higher Academic Grade Pay of Rs 6,000 has been recommended for all Assistant Professors at the entry level so as to make it more attractive compared to the entry level Grade Pay for the Civil Services and other professionals under the sixth Central Pay Commission.
Under the revised scheme, Assistant Professors have been placed in the Pay Band of Rs 15,600-39,100 entering at the AGP of Rs 6,000. A teacher with a PhD degree can move from the post of Assistant Professor to Associate Professor after completion of 12 years of service as Assistant Professor, spending four years at the AGP of Rs 6,000, five years at the AGP of Rs 7,000 and three years at the AGP of Rs 8,000.
Teachers with M.Phil and those with a postgraduate degree in a professional course entering as Assistant Professors can become Associate Professor after 13 years of service. The Associate Professors have been placed in the Pay Band of Rs 37,400- 67,000 with Grade Pay of Rs 9,000.
Wednesday, December 17, 2008
Tuesday, December 16, 2008
Cabinet clears teachers’ pay hike
New Delhi: The proposal for a 70 per cent salary hike for college educators has finally got the Cabinet go-ahead, said sources on Monday. The Cabinet clearance for the recommendations of the University Grants Commission’s (UGC) Pay Review Committee for teachers, led by Professor G K Chadha, will benefit more than five lakh teachers in over 400 universities and more than 6,000 colleges. Incidentally, the clearance came on a day when around 8,000 teachers in Delhi University started an indefinite strike to demand an increase in their pay scales.
In addition to a 70 per cent hike in pay, the UGC panel has recommended additional allowances and new positions to academics in the higher education sector. It has also suggested that the age of retirement be raised to 65 years, extendable up to 70 years. Other perks recommended by the UGC include monetary and non- monetary incentives to ensure teachers do not face stagnation and a ‘revolutionary recruitment policy’ to attract youngsters to teaching.
Women teachers also stand to benefit in a big way, with a recommendation to grant a special two-three year sabbatical to them over and above an extended maternity leave to help them rear their children.
The UGC committee also advocated the introduction of new positions, like senior associate professor, senior professor and professor of eminence. According to the recommendations, at the entry level, a faculty member will join as an assistant professor, not as a lecturer as earlier. While a lecturer’s pay scale is currently between Rs 8,000 to Rs 13,500, it will now lie between Rs 15,600 to Rs 39,100 for assistant professors, assistant professors (senior scale) and assistant professors (senior grade). Similarly, the committee has recommended a new pay band of Rs 37,400 to Rs 67,000 for professors against the existing scale of Rs 16,400 to Rs 22,400. A vice-chancellor will get a fixed amount of Rs 80,000 per month against the present package of Rs 25,000. At college level, a principal will be entitled for the package of a professor as against the current package of Rs 12,000 to Rs 22,400, he said. Apart from the existing allowances, the committee has suggested the introduction of an academic allowance of Rs 1,500 per month, as well as allowances towards house rent, transport, special duty, travel and medical expenses. Teachers with good performance records can get an annual increment of up to four per cent.
Monday, December 8, 2008
GConnect Income tax calculator for the year 2008-09
Estimation of income tax for this year is very important as we are in the new pay scale and have drawn arrears for previous years too. Needless to say, the end result is we have to pay more tax than the previous years.
But tax planning at an early date may reduce some of your tax burden. For example, you may want to go for a tax saving instrument and pay for it in easy installments rather than paying in lump sum at the end of the year. If nothing works, if you know your taxes now, you could ask your administration to deduct your tax liability on monthly basis from now onwards atleast.
But tax planning at an early date may reduce some of your tax burden. For example, you may want to go for a tax saving instrument and pay for it in easy installments rather than paying in lump sum at the end of the year. If nothing works, if you know your taxes now, you could ask your administration to deduct your tax liability on monthly basis from now onwards atleast.
For your ease and prudent tax management, GConnect has come up with a full fledged online Income tax software for the year 2008-09, which will be definitely useful for finding out your tax liability, tax treatment on your house property, HRA, 6CPC arrears etc.
6CPC Pay and Arrears - Income Tax Estimation
The lack of clarity over taxation of arrears that government employees will receive following the implementation of the 6th Pay Commission recommendations has finally cleared. The tax on first installment will be deducted in the current fiscal and that on the second installment will be deducted next year when they receive the actual payment.
Confusion had arisen about the tax treatment of the pay arrears that central government employees are about to get as part of their latest wage revision. According to finance ministry sources, only the first installment of the arrears would be taxed this fiscal. The taxation, they would be akin to the tax treatment in 1997 when the fifth pay commission recommendation was implemented wherein the tax was deducted at the time of payment.
Confusion had arisen about the tax treatment of the pay arrears that central government employees are about to get as part of their latest wage revision. According to finance ministry sources, only the first installment of the arrears would be taxed this fiscal. The taxation, they would be akin to the tax treatment in 1997 when the fifth pay commission recommendation was implemented wherein the tax was deducted at the time of payment.
6CPC New Pay and Arrears - Estimation of Income tax payable for the year 2008-09
The lack of clarity over taxation of arrears that government employees will receive following the implementation of the 6th Pay Commission recommendations has finally cleared. The tax on first installment will be deducted in the current fiscal and that on the second installment will be deducted next year when they receive the actual payment.
Confusion had arisen about the tax treatment of the pay arrears that central government employees are about to get as part of their latest wage revision. According to finance ministry sources, only the first installment of the arrears would be taxed this fiscal. The taxation, they would be akin to the tax treatment in 1997 when the fifth pay commission recommendation was implemented wherein the tax was deducted at the time of payment.
Confusion had arisen about the tax treatment of the pay arrears that central government employees are about to get as part of their latest wage revision. According to finance ministry sources, only the first installment of the arrears would be taxed this fiscal. The taxation, they would be akin to the tax treatment in 1997 when the fifth pay commission recommendation was implemented wherein the tax was deducted at the time of payment.
Tax Relief for 6CPC Arrears
We are all aware arrears payable on account of implementation Sixth Pay Commission are to be paid in two installments — 40% this year and the rest next year. As per reports, the tax on first installment will be deducted in the current fiscal and that on the second installment will be deducted next year.
Now, when arrears of pay are received in any particular year, it could artificially raise the tax liability in that year. This happens because due to the receipt of arrears, the total income increases and consequently the tax payable increases. However, this is unfair to the taxpayer. Had he originally received the money in the year(s) that he was supposed to receive it, the additional tax would have been staggered over the years instead of converging in one year as a lump sum payment.
Therefore, the law allows a tax deduction under Sec. 89(1) for this additional tax burden and we will be examining the same in detail. Incidentally, this deduction is available to every taxpayer who gets salary in advance or in arrears, whether such person is government employee or is working in the private sector.
Sec. 89(1)
Basically, the relief under Sec. 89(1) is arithmetical. It involves the ascertaining the two amounts of tax – the first is the amount of tax applicable to the total income including the extra amount in the year of receipt. The second is calculating the amount of tax by adding the arrears to the total income of the years to which they relate. The difference between the two amounts is the amount of deduction allowed.
In other words, if the taxpayer is required to pay any additional amount of tax (in the year of receipt) than what he would have otherwise paid, had he received the money in the year(s) that he was supposed to receive it, such additional tax need not be paid i.e., it can be reduced from the tax payable.
Let us take a numerical example to further amplify this issue.
Say Officer A receives Rs. 2 lakh in the current year as arrears of pay. This money was actually pertaining to the year 2006, 2007 and 2008. Now let’s assume that ordinarily, as per his salary level, Vishal would have paid a tax of Rs. 10000. But just because of the inclusion of the Pay arreares this year his tax payable climbs to Rs. 30000.
Now, for a moment let’s go back to the year 2006, and 2007. Officer A had paid a tax of Rs. 10,000 and Rs.11,000 during those years (2006 and 2007) respectively. But had the Year wise pay arrears been paid to him in those years itself, Officer would have paid a higher tax of Rs. 16,000 and Rs,18,000/-. Given this data, let us calculate the tax deduction available to Vishal.
(Note that these figures are hypothetical and meant as an example for ease of understanding – in reality, actual computations will have to be undertaken.)
Year
Particulars
Amt (Rs.)
Amt (Rs.)
2008
Tax payable with arrears
30,000
Tax payable without arrears
10,000
Difference
20,000
2006
Tax payable including Pay arrears
10,000
Tax payable excluding Pay arrears
16,000
Difference
6000
2007
Tax payable including Pay arrears
18,000
Tax payable excluding Pay arrears
11,000
Difference
7,000
Extra tax payable just on account of the arrears (Sec 89(1) deduction)
7,000
Lastly, since it is the extra tax on the arrears that is the relief admissible under Sec. 89(1), it follows that if there is no excess, no relief is admissible. In other words, if the tax in the year of receipt works out to be actually lower than what was payable in the past, no relief under Sec. 89(1) can be claimed.
Now, when arrears of pay are received in any particular year, it could artificially raise the tax liability in that year. This happens because due to the receipt of arrears, the total income increases and consequently the tax payable increases. However, this is unfair to the taxpayer. Had he originally received the money in the year(s) that he was supposed to receive it, the additional tax would have been staggered over the years instead of converging in one year as a lump sum payment.
Therefore, the law allows a tax deduction under Sec. 89(1) for this additional tax burden and we will be examining the same in detail. Incidentally, this deduction is available to every taxpayer who gets salary in advance or in arrears, whether such person is government employee or is working in the private sector.
Sec. 89(1)
Basically, the relief under Sec. 89(1) is arithmetical. It involves the ascertaining the two amounts of tax – the first is the amount of tax applicable to the total income including the extra amount in the year of receipt. The second is calculating the amount of tax by adding the arrears to the total income of the years to which they relate. The difference between the two amounts is the amount of deduction allowed.
In other words, if the taxpayer is required to pay any additional amount of tax (in the year of receipt) than what he would have otherwise paid, had he received the money in the year(s) that he was supposed to receive it, such additional tax need not be paid i.e., it can be reduced from the tax payable.
Let us take a numerical example to further amplify this issue.
Say Officer A receives Rs. 2 lakh in the current year as arrears of pay. This money was actually pertaining to the year 2006, 2007 and 2008. Now let’s assume that ordinarily, as per his salary level, Vishal would have paid a tax of Rs. 10000. But just because of the inclusion of the Pay arreares this year his tax payable climbs to Rs. 30000.
Now, for a moment let’s go back to the year 2006, and 2007. Officer A had paid a tax of Rs. 10,000 and Rs.11,000 during those years (2006 and 2007) respectively. But had the Year wise pay arrears been paid to him in those years itself, Officer would have paid a higher tax of Rs. 16,000 and Rs,18,000/-. Given this data, let us calculate the tax deduction available to Vishal.
(Note that these figures are hypothetical and meant as an example for ease of understanding – in reality, actual computations will have to be undertaken.)
Year
Particulars
Amt (Rs.)
Amt (Rs.)
2008
Tax payable with arrears
30,000
Tax payable without arrears
10,000
Difference
20,000
2006
Tax payable including Pay arrears
10,000
Tax payable excluding Pay arrears
16,000
Difference
6000
2007
Tax payable including Pay arrears
18,000
Tax payable excluding Pay arrears
11,000
Difference
7,000
Extra tax payable just on account of the arrears (Sec 89(1) deduction)
7,000
Lastly, since it is the extra tax on the arrears that is the relief admissible under Sec. 89(1), it follows that if there is no excess, no relief is admissible. In other words, if the tax in the year of receipt works out to be actually lower than what was payable in the past, no relief under Sec. 89(1) can be claimed.
Sunday, December 7, 2008
Income Tax Relief for 6CPC Arrears under Section 89(1)
For the Receipt of pay and allowances pertain to previous years as arrears, Income tax Act provides for a relief under Section 89(1) of the IT Act.
It works as follows.
Spread the arrears that you have received to the respective years. For example, if you have received arrears for the last two financial years and the current year break it into three (i.e) for the year 2006-07, 2007-08, and 2008-09.
Calculation 1
Calculate income tax for the taxable income without including arrears for 2006-07 and 2007-08 seperately based on tax structure applicable during these years. Then add apportioned arrears to the respective year’s taxable income and again find the tax. Find the difference in tax on account of addition of arrears portion. this difference has to be calculated for 2006-07 and 2007-08 seperately. Then these two difference tax amounts have to be added to find out the total difference in tax on account of arrears portion added to the taxable income in the relevant years. This is the resultant amount calculated in “Calculation 1″
Calculation 2
Then find out the income tax for the current year without including the arrears. Then find out the income tax for current year after including the total arrears received which relates to current year and also the previous years. Difference of these two tax amounts is the additional tax we have to pay on account of receipt the arrears for the current year and the previous years. This is the resultant amount calculated in “Calculation 2″
Now, subtract the resultant amount as per “Calculation 1″ from the resultant amount as per “Calculation 2″. This gives your income tax relief under Section 89 (1). Obviously, if resultant amount as per “Calculation 1″ is not less, relief is Nil.
This calculation gains significance as all of us have received the 6CPC arrears during this year which may add to our tax liability.
Since this calculation is little bit complex if not difficult, GConnect has come up with an application to calculate Income tax relief under Section 89(1).
Check this Calculator for Income Tax relief under Section 89(1)
Also, GConnect has a full-fledged Income Tax Calculation application for finding your tax liability for the year 2008-09 (Assessment year 2009-10)
Check this Income Tax Calculation for the year 2008-09
Also check Income tax calculation on house property and Income tax calculation for HRA
It works as follows.
Spread the arrears that you have received to the respective years. For example, if you have received arrears for the last two financial years and the current year break it into three (i.e) for the year 2006-07, 2007-08, and 2008-09.
Calculation 1
Calculate income tax for the taxable income without including arrears for 2006-07 and 2007-08 seperately based on tax structure applicable during these years. Then add apportioned arrears to the respective year’s taxable income and again find the tax. Find the difference in tax on account of addition of arrears portion. this difference has to be calculated for 2006-07 and 2007-08 seperately. Then these two difference tax amounts have to be added to find out the total difference in tax on account of arrears portion added to the taxable income in the relevant years. This is the resultant amount calculated in “Calculation 1″
Calculation 2
Then find out the income tax for the current year without including the arrears. Then find out the income tax for current year after including the total arrears received which relates to current year and also the previous years. Difference of these two tax amounts is the additional tax we have to pay on account of receipt the arrears for the current year and the previous years. This is the resultant amount calculated in “Calculation 2″
Now, subtract the resultant amount as per “Calculation 1″ from the resultant amount as per “Calculation 2″. This gives your income tax relief under Section 89 (1). Obviously, if resultant amount as per “Calculation 1″ is not less, relief is Nil.
This calculation gains significance as all of us have received the 6CPC arrears during this year which may add to our tax liability.
Since this calculation is little bit complex if not difficult, GConnect has come up with an application to calculate Income tax relief under Section 89(1).
Check this Calculator for Income Tax relief under Section 89(1)
Also, GConnect has a full-fledged Income Tax Calculation application for finding your tax liability for the year 2008-09 (Assessment year 2009-10)
Check this Income Tax Calculation for the year 2008-09
Also check Income tax calculation on house property and Income tax calculation for HRA
Subscribe to:
Posts (Atom)