Get ready to pay more tax for hiked babu salaries

GANDHINAGAR: While the central government has in-principle accepted the proposal of the seventh pay commission the Gujarat government has also started preparing for its implementation. Top officials in the state finance department believe that the acceptance of the seventh pay commission recommendations of more than 23% hike in the salary and perks of government employees will not only pinch the tax payers of the state but will also upset the state's already stressed finances.
At present the state's per annum salary expense is around Rs.17,500 crore which increases every year with hike in basic salary and dearness allowance.As per an estimate drawn up by the state finance department, once the seventh pay commission is implemented, Gujarat government's salary and pension expenses will jump to Rs.37,000 crore and the state government may have to increase taxes or debt of the government to pay more to its babus.

The state finance department has already started preparing for the hike which is likely to have an impact on the state budget too. A senior government officer who is close to these developments said: "The central government may adopt the new pay commission from the next budget. The pay commission has recommended that the 23.5% hike and other perks will be effective from January , 1, 2016. Any delay in implementation will mean payment of huge arrears which will put additional burden on the state finances. That is why the Gujarat government is inclined to adopt the recommendations soon as the Centre ratifies it."
"The proposed hike will translate into an increase of Rs 12,000 crore in the state government's pension expenses. At present the state's salary and pension expenses amounts to Rs.25,000 crore per annum," added the sources. Finance department officials said," Adopting the recommendations of the seventh pay commission will be a tough call for the Gujarat government as it will mean hiking taxes right before the 2017 assembly elections.