How to calculate the Seventh Pay Commission

The 7th Pay Commission is being implemented, which will bring in significant pay hikes and other benefits for government employees and pensioners. The Pay Commission was instituted by the Government to suggest changes in the salary structure of Central Government employees. The 7th Pay Commission headed by A. K. Mathur suggested a 23.55% increase in pay and allowances across all sectors. The new pay structure laid out by the 7 Pay Commission follows an open-ended, layered matrix for civilians as well as for defence personnel. The objective is to offer fair opportunities for growth and more attractive emoluments.

The significant recommendations of the 7th Pay Commission are as follows:

  • A new pay matrix and pay scale have been established. As per the new matrix, Government employees and pensioners will get a 2.57% hike in their annual income. Central Government employees are slated to double their existing salaries.
  • The minimum basic salary of a government employee has been fixed at Rs.18,000 as against Rs.7,000 that was the previous minimum salary
  • The maximum basic salary has been fixed at Rs.2.5 lakhs for apex positions such as cabinet secretaries
  • HRA will rise to 27%, 18% and 9% respectively, based on the category of city that the employee resides in.
  • A new fitment factor of 3% is being implemented as the annual increment for all employees
  • The previous Grade pay has been replaced by a pay matrix based on the hierarchical level of the employee in the office
  • The minimum and maximum scale of defence employees have been fixed at 21,700 and 2.5 lakhs respectively
  • The existing bonus system is being replaced by Performance Related Pay (PRP) for Central Government employees across all categories
  • The commission has recommended the abolition of 52 allowances and another 36 allowances have been included under an existing allowance or under a newly proposed one
  • Interest–free advances have been abolished, except advances for personal computer and house building advance

The burden of these changes will be borne by the Central Government and an amount of Rs.73,650 crore has been set aside in the Union Budget 2018, for this purpose. The Railway sector has set aside Rs.29,300 crore towards these changes.

How to calculate 7th Pay Commission

You can use any of the 7th Pay Commission calculators to arrive at your salary under the new structure.

The steps to be followed are:

  • Enter your basic pay along with your pay band and grade pay
  • Select your transport allowance, location and the percentage of your current house rent allowance
  • Select the “Calculate” button to arrive at your revised salary in compliance with the 7th Pay Commission recommendations.

The 7th Pay Commission will benefit government employees across all sectors and pensioners. With more disposable income in the hands of government employees, the loan eligibility of these employees will also be enhanced. You may avail tax deductions under section 80C, if you will invest your money in proper way, y There will be greater demand for financial products such as home loans, personal loans, vehicle loans, and so on.


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