Arrears of Dearness Allowance

 Arrears of Dearness Allowance to Government Employees

Dr. Lalit Kumar Setia

What are Arrears?

Whenever a person delivers services, he becomes entitled for remuneration for the services. In case of employees working in an organization, the remuneration in form of salaries paid after the end of a period (usually a month). The amount accrued from the date on which the first missed payment was due.

When Arrears are paid to Government Employees:

The employees get a salary hike or Dearness Allowance hike from the months which have been passed, but the amount is not received. Such amount is computed and paid as arrears to the Government employees. For example, the Dearness Allowance raised from 17% to 28% from 1^st July 2021 and paid in the month of August with the salaries of July, then there will be no arrears.

But the increase in Dearness Allowance from 17% to 28%, was due from a long period of Covid-19 pandemic. 4% increase was pending from January to June 2020 and 3% was pending from July to December 2020. Further, 4% was pending from Jan to June 2021. It means 4%+4%+3% = 11% was pending to be provided to the Government employees due to compensate them as increase in Dearness Allowance in response to rise in the inflation.

Arrears for Dearness Allowance from 17% to 28% from July 2021:

In India, the Central Government and most of the State Governments have decided to freeze the Dearness Allowance (DA) of Government employees due to financial hardship in result of Covid-19 pandemic in India and the States. The Government of Haryana had already decided to not provide arrears of DA due from July 2020 to January 2021 (https://www.livemint.com/news/india/haryana-govt-freezes-dearness-allowance-at-current-rate-till-july-2021-11594105517856.html).

The Government had decided to restore the rate of Dearness Allowance prospectively and revised rate be effective from July 2021 with the remarks that no arrears for the period from Jan 2020 to June 2021 be provided. The letter of Finance Department, Government of Haryana dated 6^th July 2020 stated that additional instalment of Dearness Allowance payable to Haryana Government Employees due from 1^st Jan 2020 shall not be paid.

The letter is available at http://www.finhry.gov.in/FileUploads/Upload_7826f176-33d2-4a20-8514-2c7f82a19035_.PDF

Whether Government may decide to give Dearness Allowance Arrears or not?

As per the decision, the Government has decided that the arrears of Dearness Allowance shall not be paid. It happened due to financial hardship which come from the pandemic of Covid-19. In case, Government decides to give arrears, there will be huge cash outflow from the treasuries of Government.

Fall in GST collections due to Covid-19 Pandemic:

It is well known that the major source of revenue collection of Government in India and States, is now Goods and Services Tax (GST). In the month of June 2021, the collections of GST is Rs. 92,849 Crores. http://gstcouncil.gov.in/sites/default/files/gst-statistics/GST-Revenue-Collection-June-2021.pdf

The collection in GST was decreased as the Government provided relief measures in form of waiver or reduction in the interest on delayed return filing for 15 days for the return filing month June 2021 for the taxpayers with the aggregate turnover up to Rs. 5 Crore in the wake of covid pandemic second wave.

In May 2021, the GST collection was Rs. 1,02,709 Crores. In May 2021, the taxpayers had been given various relief measures in the wake of covid pandemic second wave.

In April 2021, despite of second wave of Covid-19 pandemic, the Indian businesses have paid the GST and filed the GST returns on time and the GST Collection was Rs. 1,41,384 Crores.

In March 2021, the GST Collection was Rs. 1,23,902 Crores. However, during this month the Central Government has settled the amount of IGST in the ratio of Fifty Fifty with the States and UTs.

In February 2021, the GST collection was Rs. 1,13,143 Crores. In this month also, the Central Government settled the amount of IGST with the States / UTs in ratio of Fifty Fifty.

In Jan 2021, the GST collection was Rs. 1,19,847 Crores. Keeping in view the collections from Jan 2021 to June 2021; the Government decided to settle the complications from fall in the collection of GST and reduce the revenue expenditure.

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