Tuesday, September 2, 2008

Sixth Pay Commission: Taxman is watching

By Husna Anjum

New Delhi, Sept 3, 2008: If you were being too happy to have 40 percent arrears as Sixth Pay Commission recommendations, I would advise you not to be. The taxman is watching you and would be knocking on your doors any time from now onwards.

It is being reported that the government is planning to receive 100 percent tax from your 40 percent arrears that is being paid to you this month.

Most of the people had ready list for spending the 40 percent arrears that many of late realized was not as much as they had initially expected. Now they are finally realizing that they had in fact no money to spend from their arrears amount being paid to them.

If the government taxes the whole arrear amount from the 40 percent it is paying this year it means that the central government employees may not have anything left to spend from arrears as they had been planning for the last several months.

If the government really decides to go this way it would virtually wipe out almost the entire amount of 40% arrears to be paid to central government employees 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.

Around 5.5 million central government employees are going to benefit from the pay panel recommendations. A larger number of state government employees too will benefit from the recommendations if their respective state governments implement the recommendations.

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