For 5.5m government staff looking forward to take home the 40% of the accumulated arrears on their increased salary next month, in time for some festive spending on Diwali and Eid, here’s a sad news. The government has decided to levy tax on the entire amount of arrears – even for the 60 % which will be paid next year, in the current fiscal itself.
For most employees, the decision would virtually wipe out almost the entire amount of 40% arrears to be paid to them this year. Senior bureaucrats will suffer the most as their tax would be topped with a surcharge of 10%, applicable on an income of Rs 10 lakh and above.
A senior finance ministry official said the surcharge to be paid by officers of the rank of joint secretary and above ranges between Rs 24,600 and Rs 52,500. The impact would be less on the lower grades.