Allowances Abolished by the 7th CPC
The 7th CPC reviewed 197 allowances and abolished 53, subsumed 37 and retained 95. The Government kept 12 of the 53 alive. Full list, from 1 July 2017.
The allowances abolished by the 7th Central Pay Commission are the 53 allowances the Commission recommended discontinuing outright, out of 197 it reported on, alongside 37 it recommended folding into a larger or newly created allowance and 95 it retained and repriced. The Government of India gave effect to the package, with modifications in 34 allowances, through Department of Expenditure Resolution No. 11-1/2016-IC published in the Gazette of India (Extraordinary) on 6 July 2017, with every change taking effect from 1 July 2017.
The Government did not accept the cuts as they stood. It refused to abolish 12 of the 53, and it let 3 of the 37 keep a separate identity, in each case for a functional reason in the Railways, the Department of Posts or the scientific departments. The net effect it advertised was a reduction from 197 allowances to 128, at an annual cost of Rs. 30,748.23 crore.
The distinction that runs through the whole subject is between an allowance that was abolished and one that was subsumed. An abolished allowance stopped being paid and nothing took its place. A subsumed allowance was folded into a larger allowance that continues, so the employee kept the benefit under a new name. The Commission’s own summary table in Chapter 8.1 uses the phrase “abolished as a separate allowance” for the subsumed group, which is exactly why loose summaries add the two figures together and report an abolition count of 90 that no primary document supports.
The changes reach almost every cadre, and the rupee effect on any one pay slip was usually small. Most of the abolished allowances were minor and were never reckoned for dearness allowance, house rent allowance or pension, so ending them cost the employee little. The larger consequence is administrative: a scatter of 197 payments became a shorter set built around a handful of consolidating allowances, and that is the structure governing the allowances of central government employees today.
The 197 allowances and their 15 functional heads
The Commission compiled the first complete inventory of central government allowances that has ever existed, and grouped it into 15 functional heads at paragraph 8.2.5(2) of the report. Before that exercise no single document listed what the central government paid over and above basic pay. The 7th Central Pay Commission submitted its report on 19 November 2015 and devoted the whole of Chapter 8 to the subject.
The head-by-head table below is the Commission’s own, and it shows where the clutter actually sat. Two heads, risk and hardship with 51 allowances and the residual “other allowances” with 52, account for more than half the list between them.
| Functional head | Allowances |
|---|---|
| Allowances payable for additional or extra duty | 14 |
| Allowances related to knowledge updates | 3 |
| Allowances related to deputation | 3 |
| Allowances related to working on holidays | 3 |
| Allowances related to housing | 7 |
| Allowances related to good service | 4 |
| Qualification allowances | 15 |
| Allowances related to risk and hardship | 51 |
| Allowances for running staff of Indian Railways | 13 |
| Allowances related to sports | 2 |
| Sumptuary allowances | 5 |
| Allowances related to training | 2 |
| Allowances related to travel | 13 |
| Allowances related to uniform | 9 |
| Other allowances | 52 |
| Total | 196 |
Every allowance was then put through a three-part test set at paragraph 8.2.5(3): whether there was a continuing need for it, whether the set of people it covered was still appropriate, and whether it could be rationalised by revising the rate or clubbing it with a similar allowance. The uniform head of nine and the risk-and-hardship head of 51 were the two that consolidation reshaped most, because in both cases a dozen separate payments were doing one job.
Reconciling the counts
Four different tallies circulate for this exercise, and all four are correct at the stage they were taken. Paragraph 8.2.6 of the Commission’s report, which is the sentence most often quoted, says the Commission recommended abolishing 52 allowances altogether and abolishing another 36 as separate identities while subsuming them elsewhere. That is the Chapter 8 count against the inventory of 196.
The reconciled figures are in paragraph 8.3 of the Committee on Allowances report of 27 April 2017, and they are the ones the Government used. The Commission reported on 197 allowances, being the 196 it compiled plus the Special Train Controllers’ Allowance it proposed as a new allowance for Indian Railways. Of those, it made recommendations on 185: 53 to be abolished, including allowances abolished for particular categories only, 37 to be subsumed, and 95 to be retained and rationalised. It made no recommendation on 12 Railway allowances, whose rates are settled bilaterally between the Railway Board and the federations. Those four numbers sum to 197.
| Category | Allowances |
|---|---|
| Recommended abolished | 53 |
| Recommended subsumed into another allowance | 37 |
| Retained and rationalised | 95 |
| No recommendation made, Ministry of Railways | 12 |
| Total reported | 197 |
The press release of June 2016 quoted 51 and 37, and the Press Information Bureau release of 28 June 2017 quoted 53 and 37 against a total of 197. These are classification differences at different stages, not a change of substance. The figure to use in a sentence about the final position is the Government’s own: the total number of allowances was rationalised from 197 to 128.
How the Government reworked the recommendations
Allowances were the one part of the 7th CPC package the Cabinet declined to settle in 2016. It approved pay and pension on 29 June 2016 and referred every allowance except dearness allowance to a separate committee, directing that until that committee reported, allowances would continue to be paid at existing rates in the existing pay structure, as if pay had not been revised at all.
The Committee on Allowances was constituted by Department of Expenditure Office Memorandum dated 22 July 2016 under Finance Secretary and Secretary (Expenditure) Ashok Lavasa, with the secretaries of Home Affairs, Defence, Health and Family Welfare, Personnel and Training and Posts and the Chairman of the Railway Board as members. It was given four months. It held 15 formal meetings between August 2016 and April 2017, took note of about six more held by a group of officers, met the National Council (Staff Side) of the Joint Consultative Machinery and staff associations separately, and reported to the Finance Minister on 27 April 2017, nine months after it was set up.
The Committee received demands on 79 of the 197 allowances and recommended changes in 34 of them. Its own breakdown, at paragraph 8.5 of its report, is 12 changes among the abolished allowances, 9 among the subsumed and 13 among the retained and rationalised. The Empowered Committee of Secretaries screened the report, and the Union Cabinet approved the package with modifications in 34 allowances on 28 June 2017.
Two of those modifications reversed abolitions outright. The Government decided not to abolish 12 of the 53, keeping them alive for the specific functional requirements of the Railways, the Department of Posts and the scientific departments such as Space and Atomic Energy, and it decided that 3 of the 37 marked for subsuming would continue as separate identities on account of their unique nature. The Press Information Bureau put the beneficiaries of those two decisions at over one lakh employees.
The package was notified by Department of Expenditure Resolution No. 11-1/2016-IC, published in the Gazette of India (Extraordinary) on 6 July 2017, with every revised allowance admissible from 1 July 2017. The annual cost was Rs. 30,748.23 crore: the Commission’s own projection of Rs. 29,300 crore plus Rs. 1,448.23 crore for the Government’s modifications. Within the smaller figure, the Committee costed its proposed changes to the abolished allowances at about Rs. 196.66 crore and to the subsumed allowances at about Rs. 137.82 crore.
Repricing of the allowances that survived
The 95 allowances that survived were not simply carried forward at their old rates. Paragraph 8.2.5(4) of the report set four repricing rules, and knowing which rule applied to an allowance explains why some rose by more than half and others did not move at all.
| Type of allowance | Repricing rule | Example |
|---|---|---|
| Fixed rupee amount, not indexed to dearness allowance | Multiplied by 2.25 | Reward for meritorious service |
| Fixed rupee amount, partially indexed, rising 25% each time dearness allowance rises 50% | Multiplied by 1.5 | Field Area Allowance |
| Fixed rupee amount, fully indexed to dearness allowance | No increase | Transport allowance |
| Percentage of basic pay | Rationalised by a factor of 0.8 | House rent allowance, 30% to 24% as recommended |
The logic of the last two rows is the part most often missed. A fully indexed allowance had already received its increase through the dearness-allowance mechanism, so a further multiplier would have paid for the same inflation twice. A percentage-of-pay allowance is computed on a basic pay that itself rose sharply under the new pay matrix, so holding the percentage constant would have delivered a rise the Commission had not intended. The 0.8 factor is what produced the recommendation to cut house rent allowance from 30%, 20% and 10% to 24%, 16% and 8%, a recommendation the Government accepted but softened with floor amounts of Rs. 5,400, Rs. 3,600 and Rs. 1,800 and an earlier escalation trigger.
Abolition outright
The 53 allowances recommended for abolition were, in the main, small payments whose purpose had lapsed, whose duty had become an ordinary part of the job, or which duplicated a broader allowance. The reasoning is easiest to see in the best-known cases.
The Overtime Allowance was abolished for all categories except operational staff and industrial employees governed by statutory provisions. The recommendation was not new. Paragraph 8.17.96 of the report records that the 3rd, 4th, 5th and 6th Central Pay Commissions had each recommended the same thing, and that it had never been carried out. This time the Government acted, but with a limit for the retained categories: their rates were not revised and continue at the levels fixed by the Office Memorandum of 19 March 1991, so an hour of authorised overtime now adds only a modest sum. The Committee on Allowances added a condition of its own at paragraph 3.6.8, that payment be strictly linked to biometric attendance, and required every ministry to prepare a list of the operational staff on its rolls. The operating instructions are in DoPT Office Memorandum No. A-27016/03/2017-Estt.(AL) dated 19 June 2018.
The Family Planning Allowance was abolished from 1 July 2017 by Office Memorandum No. 12(4)/2016-E.III(A) dated 7 July 2017, paragraph 3 of which records that it ceased to exist in all cases, with no protection for employees already drawing it. It was a monthly incentive of Rs. 210 to Rs. 1,000 keyed to grade pay for employees who adopted the small-family norm. The Commission reasoned at paragraph 8.17.50 that most child-related benefits, from Children Education Allowance to maternity leave to leave travel concession, are already limited to two children, and that awareness of appropriate family size among government servants had risen, so a separate population-control payment was no longer needed. In the form it held from the Office Memorandum of 24 September 2008 it was an allowance rather than pay, so it entered neither dearness allowance nor the pension base, and its abolition disturbed no derived calculation.
Paragraph 8.10.80 of the report groups 19 abolitions with a stated reason for each, and those reasons are the four the whole exercise turns on. The assisting cashier, cash handling and treasury allowances were said to have lost relevance with technological advance and banking, with the Commission going on to recommend that ministries first minimise and then eliminate cash transactions altogether. The commando, handicapped, night patrolling, operation theatre, organisation special pay and risk allowances were called meagre and unnecessary once the proposed pay rise took effect. The coal pilot and out-turn allowances were called outdated. For the ASV, flying squad, headquarters, metropolitan, Rajdhani, savings bank and secret allowances the finding was narrower: the justification the ministry concerned had offered was not sufficient for their continuance.
The desk allowance at item 48 shows how small some of these were. It was paid at Rs. 900 a month to Desk Officers in the Central Secretariat Service and other headquarters services, and the Commission recorded at paragraph 8.17.39 that it had been virtually non-existent since 2010. The vigilance allowance at item 194, Rs. 2,500 a month for Vigilance Inspectors in Indian Railways, went for a reason worth noting: it was paid only in the Railways although Vigilance Inspector posts exist under other ministries, and the Ministry of Railways produced no evidence that recruitment had been a problem before the allowance or had improved after it.
Among the location allowances, the Special Compensatory (Hill Area) Allowance at item 158 was abolished outright on the finding that there is hardly any hardship involved at altitudes of 1,000 metres above sea level. The Commission paired that abolition with a replacement: the High Altitude Allowance should be extended to civilian employees where neither the Tough Location Allowance nor any other risk and hardship allowance is admissible at a location covered by it. The abolition took effect from 1 July 2017 through Department of Expenditure Office Memorandum No. 4/1/2017-E.II(B) dated 13 July 2017, superseding the entitlement granted by Office Memorandum No. 4(2)/2008-E.II(B) dated 29 August 2008. This is the point most often misread, because the neighbouring remote-locality, bad-climate and tribal-area allowances were not abolished but subsumed into the Tough Location Allowance.
| Allowance | Chapter 8.1 item | Who drew it | Why it went |
|---|---|---|---|
| Overtime Allowance | 125 | Staff working beyond designated working hours | Pay had overtaken the rate, frozen at the 1991 level; retained for operational and statutory industrial staff only |
| Family Planning Allowance | 60 | Employees who adopted the small-family norm | Child-related benefits are already capped at two children and awareness had risen |
| Desk Allowance | 48 | Desk Officers in the Central Secretariat Service and other headquarters services, Rs. 900 a month | Virtually non-existent since 2010 |
| Savings Bank Allowance | 145 | Staff running departmental savings-bank work | The ministry’s justification was not sufficient for continuance |
| Assisting Cashier Allowance | 11 | Staff assisting the cashier | Cash handling had lost relevance with banking and electronic payment |
| Vigilance Allowance | 194 | Vigilance Inspectors in Indian Railways, Rs. 2,500 a month | Paid only in the Railways, with no evidence it improved recruitment |
| Handicapped Allowance | 73 | Eligible staff | A meagre rate, unnecessary after the proposed pay rise |
| Special Compensatory (Hill Area) Allowance | 158 | Staff in notified hill areas | Hardly any hardship at altitudes of 1,000 metres above sea level |
| Rajdhani Allowance | 137 | Train Superintendents and Deputy Train Superintendents of Rajdhani Express trains, Rs. 900 and Rs. 360 a month | The ministry’s justification was not sufficient for continuance |
| Air Despatch Pay | 4 | Personnel below officer rank air-dropping supplies in forward areas, Rs. 360 a month | The duty is intrinsic to the job profile |
Allowances the Commission was never told about
A second route to abolition sits outside the list of 53, and it is the one an employee is most likely to be caught by. Paragraph 8.2.5(1) of the report states that the Commission considered every allowance reported to it, and that any allowance not mentioned in Chapter 8, and therefore never reported, shall cease to exist immediately.
The paragraph leaves one way back. Where there is a demand or a requirement for continuing an allowance the Commission never deliberated on, the ministry concerned must re-notify it after obtaining the approval of the Ministry of Finance, and must put the notification in the public domain. That is a fresh sanction under the ordinary allowance-approval route, not a survival of the old order, and it carries the current date rather than the old one.
This provision is why the question “was my allowance abolished?” cannot be answered from the named list of 53 alone. An allowance absent from all 197 entries was extinguished by paragraph 8.2.5(1) without ever being named, and the only proof that it survived is a post-2016 notification carrying Ministry of Finance approval.
Subsuming into new umbrella allowances
The subsuming is where most of the tidying happened, and it produced five new allowances rather than the “three or four” usually reported. Each replaced a group of small payments serving one purpose with a single payment at a single rate structure.
Dress Allowance
The Commission recommended at paragraph 8.16.14 that all uniform-related allowances be subsumed into a single Dress Allowance including shoes. Its list was nine allowances, the entire uniform head of the inventory: the clothing allowance at item 27, the initial-equipment allowance at 87, the kit-maintenance allowance at 94, the outfit allowance at 121, the robe allowance at 143, the robe-maintenance allowance at 144, the shoe allowance at 148, the uniform allowance at 192 and the washing allowance at 196.
The Government kept eight of the nine and left the outfit allowance out. Paragraph 6 of Department of Expenditure Office Memorandum No. 19051/1/2017-E.IV dated 2 August 2017 provides that the outfit allowance continues to be paid separately to Indian Foreign Service officers, enhanced by 50% instead of subsumed. Paragraph 5 of the same order also preserves special and protective clothing in kind, including the fluorescent clothing supplied to Railway trackmen and the clothing issued at Siachen Glacier, so the Dress Allowance covers only the basic uniform.
The allowance is paid once a year in July, runs from Rs. 6,250 to Rs. 34,750 a year by category, and rises 25% each time dearness allowance rises by 50%, so the next step comes at 100% and not at 75%. Once it applies to a post, none of the eight old allowances is payable separately. The rates below reflect the 25% enhancement that took effect when dearness allowance reached 50% on 1 January 2024.
| Category | Base rate | Rate since 1 January 2024 |
|---|---|---|
| Special Protection Group, operational | Rs. 27,800 a year | Rs. 34,750 a year |
| Special Protection Group, non-operational | Rs. 21,225 a year | Rs. 26,531.25 a year |
| Officers of the Army, Air Force, Navy, CAPFs, central police organisations, RPF, RPSF, IPS and Coast Guard | Rs. 20,000 a year | Rs. 25,000 a year |
| Military Nursing Service officers, DANIPS officers, Assistant Commissioners of Police of Delhi Police and other union territories | Rs. 15,000 a year | Rs. 18,750 a year |
| Executive staff of Customs, Central Excise and Narcotics; ICLS officers; personnel below officer rank of the Defence services, CAPFs, RPF and Coast Guard; station masters | Rs. 10,000 a year | Rs. 12,500 a year |
| Other categories supplied uniform, including trackmen and running staff, staff-car drivers, multi-tasking staff and canteen staff | Rs. 5,000 a year | Rs. 6,250 a year |
| Nursing personnel | Rs. 1,800 a month | Rs. 2,250 a month |
The Risk and Hardship Matrix
The Risk and Hardship Allowance matrix replaced dozens of separate field, risk and hardship allowances with one grid. It runs on two axes, risk from R1 to R3 and hardship from H1 to H3, giving nine cells plus a ceiling cell, RH-Max, and each cell carries two rates, one for Level 9 and above and one for Level 8 and below. Because risk and hardship carry equal weight the grid is symmetric about its diagonal, so R1H2 and R2H1 pay the same, as do R1H3 and R3H1 and R2H3 and R3H2, collapsing ten cells into seven distinct rate slabs. A posting is placed in one cell, and the cell rate replaces the older named allowance for that risk or hardship.
Among the allowances the matrix absorbed are the field area allowance, the counter-insurgency operations allowance, the flying allowance, the special forces allowance, the high altitude allowance and the hospital patient care allowance, together with dozens of smaller field allowances. Every cell escalates 25% each time dearness allowance crosses a 50% milestone.
| Cell | Base, Level 9 and above | Base, up to Level 8 |
|---|---|---|
| RH-Max | Rs. 31,500 | Rs. 21,000 |
| R1H1 | Rs. 25,000 | Rs. 17,300 |
| R3H3 | Rs. 1,200 | Rs. 1,000 |
After the 25% rise from 1 January 2024, R1H1 stands at Rs. 31,250 for Level 9 and above and Rs. 21,625 for Level 8 and below, and R3H3 at Rs. 1,500 and Rs. 1,250. RH-Max nominally stands at Rs. 39,375 and Rs. 26,250, but nobody is paid at it, for the reason set out below.
Tough Location Allowance
The Tough Location Allowance is not a free-standing scheme. It is the name given to the three lowest hardship cells of the same matrix, R3H1, R3H2 and R3H3, and its tiers draw those cell rates. Paragraph 8.10.62 of the report sets out the mapping precisely: the places covered by Special Compensatory (Remote Locality) Allowance Parts A and B go to Tough Location Allowance-I, Part C goes to Tough Location Allowance-II, and the bad climate allowance, the tribal area allowance, the Sunderban allowance and Part D go to Tough Location Allowance-III.
| Tier | Matrix cell | Rate from 1 January 2024, Level 9 and above | Rate from 1 January 2024, up to Level 8 |
|---|---|---|---|
| Tough Location Allowance-I | R3H1 | Rs. 6,625 | Rs. 5,125 |
| Tough Location Allowance-II | R3H2 | Rs. 4,250 | Rs. 3,375 |
| Tough Location Allowance-III | R3H3 | Rs. 1,500 | Rs. 1,250 |
The rates are notified in Department of Expenditure Office Memorandum No. 3/1/2017-E.II(B) dated 19 July 2017. Paragraph 8 of that order governs the interaction with the Special Duty Allowance for the North-Eastern Region, Ladakh and the islands, and it is more particular than a simple bar. Tough Location Allowance is not admissible along with Special Duty Allowance, but the employee has the option of continuing the Special Compensatory (Remote Locality) Allowance at the old 5th CPC rates, where it was admissible, together with Special Duty Allowance at the revised rate of 10% of basic pay. The choice is therefore between one revised allowance and two allowances of which the location component is frozen at pre-revised rates, not between two revised allowances. Paragraph 9 gives a parallel option between the hard area allowance, which is admissible alongside the island special duty allowance, and the subsumed location allowances.
Extra Work Allowance and Additional Post Allowance
Two smaller umbrellas dealt with the extra-duty head. The Extra Work Allowance, at paragraph 8.3.23, absorbed seven allowances: the caretaking allowance at item 22, the extra duty allowance at 57, the flag station allowance at 64, the flight charge certificate allowance at 65, the library allowance at 100, the Rajbhasha allowance at 136 and the special appointment allowance at 157. It is paid at a uniform 2% of basic pay a month, for a maximum of one year at a time, with a minimum gap of one year before the same employee can be deployed on similar duty again, and it is not combinable: an employee performing two qualifying extra duties still draws 2% in total.
The Additional Post Allowance, at paragraph 8.3.12, absorbed two allowances and not the three the Commission proposed: the acting allowance at item 2 and the dual charge allowance at 52. The fixed monetary compensation at item 63 was recommended for absorption but was retained as a separate allowance on the Committee’s recommendation at paragraph 4.6.1 of its report, enhanced by a factor of 2.25 to Rs. 115 a day for a full beat and Rs. 54 for a shared beat, and Department of Personnel and Training Office Memorandum No. 2/13/2017-Estt.(Pay-II) dated 8 August 2018 names only the first two. An employee formally appointed to hold full charge of the duties of a higher post draws the pay of that post or 10% of basic pay a month, whichever is more beneficial, and one holding full charge of a post on a similar level draws 10% of basic pay, in each case subject to the total of basic pay and the allowance not exceeding the apex pay of Rs. 2,25,000. The 5% rate in paragraph 8.3.12(f) applied only to two Postmen sharing an absentee beat, and it was never implemented. The full treatment is in charge allowance and current duty.
| New umbrella allowance | What it absorbed | Rate basis |
|---|---|---|
| Dress Allowance | Nine uniform allowances, of which the Government kept the outfit allowance separate | Rs. 6,250 to Rs. 34,750 a year by category |
| Risk and Hardship Matrix | Field area, counter-insurgency operations, flying, special forces, high altitude, hospital patient care and dozens of other risk and hardship allowances | Cell rate, two pay bands |
| Tough Location Allowance | Remote locality, bad climate, scheduled or tribal area and Sunderban allowances | Cells R3H1, R3H2 and R3H3 of the same matrix |
| Extra Work Allowance | Caretaking, extra duty, flag station, flight charge certificate, library, Rajbhasha and special appointment allowances | 2% of basic pay a month |
| Additional Post Allowance | Acting allowance and dual charge allowance; the fixed monetary compensation was retained separately | Higher post’s pay or 10% of basic pay a month, whichever is more beneficial |
The 12 allowances the Government refused to abolish
The clearest illustration of the Government softening the Commission is the set of allowances it kept alive. The Committee on Allowances recommended changes in 12 of the 53 abolished allowances at paragraph 3.7 of its report, appending the full list of 53 at Appendix I, and the Cabinet accepted them on 28 June 2017.
| Allowance | Who draws it | What the Government did |
|---|---|---|
| Breakdown Allowance | Non-gazetted Railway servants earmarked for breakdown duty, Rs. 120 to Rs. 300 a month by grade pay | Retained, on the Railways’ case that it goes only to earmarked staff called out beyond office hours |
| Cash Handling Allowance | Cashiers | Retained and merged with the Treasury Allowance |
| Treasury Allowance | Treasury clerks | Retained and merged with the Cash Handling Allowance |
| Coal Pilot Allowance | Shuntmen and Group D staff of the transportation department, Indian Railways, who accompany pilots in collieries, Rs. 45 for the first trip and Rs. 15 for each later trip | Retained |
| Cycle (Maintenance) Allowance | Postmen, Railway trackmen and other field-touring staff | Retained and the rate doubled from Rs. 90 to Rs. 180 a month, benefiting more than 22,200 employees |
| Funeral Allowance | Rs. 6,000 on the death of an employee in peace areas, with mortuary charges reimbursed for Defence personnel | Retained |
| Launch Campaign Allowance | Supporting staff in the space and atomic energy sector | Retained and raised from Rs. 7,500 to Rs. 11,250 a year |
| Space Technology Allowance | Supporting staff in the space and atomic energy sector | Retained and raised from Rs. 7,500 to Rs. 11,250 a year |
| Operation Theatre Allowance | Staff nurses in central government hospitals working in intensive care units and operation theatres, Rs. 240 a month | Retained |
| Overtime Allowance | Operational staff and statutory industrial employees | Retained for those categories only, at 1991 rates, linked to biometric attendance |
| Ration Money Allowance | Defence and CAPF personnel not dining in mess | Retained with wider admissibility |
| Risk Allowance | Staff on hazardous duty, including sweepers and safaiwalas cleaning underground drains and sewer lines and staff at trenching grounds and infectious-diseases hospitals, Rs. 60 a month | Retained |
The Cycle (Maintenance) Allowance is the best-known case, and its arithmetic shows what these reversals were worth. It is a flat monthly sum for field-touring staff, typically Group C, who own and maintain a bicycle used for extensive official journeys. The Commission recommended abolishing it. The Government retained it, doubled it from Rs. 90 to Rs. 180 a month, and notified it by Department of Expenditure Office Memorandum F. No. 19039/4/2008-E.IV dated 14 July 2017. Rs. 180 a month is Rs. 2,160 a year, which is small against a pay slip and large against the cost of a bicycle chain.
The cash handling and treasury allowance is a case of two abolitions reversed into one payment. The Commission recommended abolishing both the Cash Handling Allowance at item 23 and the Treasury Allowance at item 189, noting the spread of electronic payments. The Government did not accept either recommendation and instead merged the two into a single allowance keyed to the average monthly cash handled, so the cashier and the treasury clerk kept a payment for the personal liability of holding government money. The merged rates are Rs. 700 a month where the average monthly cash disbursed in physical form is up to Rs. 5 lakh and Rs. 1,000 where it is above, set by Department of Personnel and Training Office Memorandum No. 4/6/2017-Estt.(Pay-II) dated 18 January 2019 with effect from 1 July 2017, and unrevised since. The Assisting Cashier Allowance at item 11 was not reversed with them.
The scientific departments kept allowances tied to their specific work. The abolition of the Launch Campaign Allowance and the Space Technology Allowance was not accepted, and both rates were raised from Rs. 7,500 to Rs. 11,250 a year to keep the incentive for supporting employees in the space and atomic energy sector, with the Professional Update Allowance for non-gazetted Department of Atomic Energy employees continuing at the same enhanced figure.
The Fixed Medical Allowance is frequently listed with these reversals and does not belong there. The Commission never recommended abolishing it. Its Chapter 8.1 entry reads “Retained. Status quo to be maintained,” and paragraph 8.17.52 gives the reason: the allowance had already been raised from Rs. 300 to Rs. 500 a month with effect from 19 November 2014, so no further enhancement was recommended, against a staff-side demand for Rs. 2,000. The Government departed from the Commission on the rate rather than on continuation, doubling it to Rs. 1,000 a month by Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/34/2017-P&PW(D) dated 19 July 2017, a change the Press Information Bureau said would reach more than 5 lakh pensioners not using the Central Government Health Scheme.
Siachen and Antarctica outside the matrix
The two harshest postings in the central government service are paid outside the Risk and Hardship Matrix, and it was the Government that took them out, not the Commission that left them out. Paragraph 8.10.67 of the report placed both the Siachen Allowance and the Antarctica Allowance in the RH-Max cell, at Rs. 31,500 a month for Level 9 and above and Rs. 21,000 for Level 8 and below.
The reason for the reversal was arithmetic, not sentiment. For Antarctica the RH-Max rate was lower than the existing per-day rate, so the Government kept the allowance out of the matrix and on its per-day basis, raising it from Rs. 1,125 to Rs. 1,500 a day in summer and from Rs. 1,688 to Rs. 2,000 a day in winter. For Siachen the Government went further than the matrix, fixing the allowance at Rs. 42,500 a month for officers at Level 9 and above and Rs. 30,000 for jawans and junior commissioned officers at Level 8 and below, against existing rates of Rs. 21,000 and Rs. 14,000, so the allowance more than doubled.
The consequence is that RH-Max is a notional ceiling. The Commission had made it the ceiling for risk and hardship allowances at paragraph 8.10.66, stating that no individual allowance should exceed it, and then placed exactly two allowances in it. Both were removed before the Resolution took effect, and the Siachen rate of Rs. 42,500 sits above the ceiling the same report defined. The highest rate anyone actually draws from a cell is R1H1, at Rs. 31,250 and Rs. 21,625 since 1 January 2024.
Effect on the pay slip and the arrears gap
For the employee, an abolished allowance simply stopped from 1 July 2017. There is no pay protection and no personal-pay style shield for a discontinued allowance, because the abolished allowances were small and were not reckoned for dearness allowance, house rent allowance or pension. Where an allowance was subsumed, nothing was lost in substance: the benefit continued through the umbrella that absorbed it, usually at a higher rate than the payment it replaced.
The gap between the two effective dates is the part that cost employees money, and it lasted 18 months rather than a year. Revised pay ran from 1 January 2016 under the CCS (Revised Pay) Rules, 2016, but revised allowances only from 1 July 2017, because the Cabinet decision of 29 June 2016 had directed that allowances continue at existing rates in the existing pay structure until the Committee on Allowances reported. For those 18 months employees drew 6th CPC allowance rates on 7th CPC basic pay, and no arrears were paid for the gap. That is why the house rent allowance and transport allowance orders carry July 2017 dates while the revised pay itself runs from January 2016.
Tax treatment of the surviving umbrellas
An allowance that no longer exists cannot be exempt or taxable, so the tax question only arises for the subsumed allowances that continue under a new name, and they follow the rule of the umbrella that absorbed them. The new tax regime, which has been the default since the financial year 2023-24, removes nearly every exemption that once applied to allowances.
The Dress Allowance is the clearest case. Under the old regime it was exempt under Section 10(14) of the Income-tax Act, 1961, read with Rule 2BB, to the extent the cost was actually incurred on the purchase and maintenance of the uniform. Under the new regime it is fully taxable, because the uniform-allowance exemption is not among the deductions the default regime retains. The income tax for government employees therefore turns on which regime the employee has chosen, not on the pre-2017 allowance labels, and an employee who kept the old regime for the uniform exemption is comparing a small exemption against the standard deduction and slab rates of the default.
Bearing on the 8th Central Pay Commission
The rationalised structure has held without amendment since 1 July 2017, and it is the structure the next Commission inherits. The 8th Central Pay Commission was constituted by gazette notification on 3 November 2025 and has not submitted a report, so nothing about its treatment of allowances is decided, and no 8th CPC allowance rate should be treated as fixed until its report is published and notified.
What can be said is what it starts from. The 7th CPC began with an inventory nobody had ever compiled, of 197 allowances across 15 functional heads, many fixed decades earlier and never reviewed. The 8th CPC begins with about 128 allowances built around the Dress Allowance, the Risk and Hardship Matrix with the Tough Location Allowance inside it, the Extra Work Allowance and the Additional Post Allowance, each with a stated rate basis and a stated escalation rule. The consolidation work has been done once, so the scope for a repeat of the 2017 exercise is much smaller, and the live questions are about rates and about which cells and categories are correctly placed rather than about how many payments exist.
Frequently Asked Questions (FAQs)
How many allowances did the 7th Central Pay Commission abolish?
- The Commission reported on 197 allowances and recommended abolishing 53 outright, subsuming 37 into an existing or newly proposed allowance, and retaining and rationalising 95, while making no recommendation on 12 Railway allowances. Those are the figures in paragraph 8.3 of the Committee on Allowances report of 27 April 2017 and in the Press Information Bureau release of 28 June 2017. The narrower tally at paragraph 8.2.6 of the Commission’s own report, 52 abolished and 36 subsumed out of 196, counts only Chapter 8. The changes took effect on 1 July 2017 through Department of Expenditure Resolution No. 11-1/2016-IC dated 6 July 2017.
Why do the counts differ between 196 and 197, and between 52 and 53?
What is the difference between an allowance being abolished and being subsumed?
Which allowances did the government refuse to abolish?
Was the overtime allowance abolished by the 7th CPC?
Which new allowances did the 7th CPC create to absorb the old ones?
Is the Tough Location Allowance a separate scheme from the Risk and Hardship Matrix?
Can an employee draw the Tough Location Allowance and the Special Duty Allowance together?
Was the fixed medical allowance abolished?
Why were the Siachen and Antarctica allowances taken out of the Risk and Hardship Matrix?
How were the allowances that survived repriced?
What happened to an allowance the Commission was never told about?
Do employees who were drawing an abolished allowance get any protection?
Were arrears paid for the gap between the pay revision and the allowance revision?
What did the whole allowances package cost?
Will the 8th Central Pay Commission abolish more allowances?
Related Articles
- Allowances for central government employees
- 7th Central Pay Commission
- 8th Central Pay Commission
- CCS (Revised Pay) Rules, 2016
- Pay matrix
- Overtime allowance
- Family Planning Allowance
- Washing allowance
- Dress allowance
- Uniform allowance
- Outfit allowance
- Risk and hardship allowance
- Tough Location Allowance
- Special compensatory (remote locality) allowance
- Bad climate allowance
- Tribal area allowance
- Hill area allowance
- Special duty allowance
- Hard area allowance
- Island special duty allowance
- High altitude and Siachen allowance
- Hospital patient care allowance
- Flying allowance
- Cash handling and treasury allowance
- Cycle allowance
- Ration money allowance
- Fixed Medical Allowance
- Central Government Health Scheme
- Nursing allowance
- Non-practising allowance
- Committee on Allowances (Lavasa Committee)
- Extra Work Allowance
- Additional Post Allowance
- Desk allowance
- Savings bank allowance
- Rajbhasha allowance
- Handicapped allowance
- Vigilance allowance
- Special Protection Group
- Dearness allowance
- House rent allowance
- Transport allowance
- New tax regime
- Income tax for government employees
- Department of Expenditure
- Department of Personnel and Training
External references
- 7th Central Pay Commission report
- Report of the Committee on Allowances, 27 April 2017
- Department of Expenditure, 7th CPC orders and circulars
- Department of Expenditure
- Department of Personnel and Training
- Press Information Bureau
References
- Report of the Seventh Central Pay Commission, submitted 19 November 2015, Chapter 8.1 (List of Allowances, Summary) and Chapter 8.2, paragraphs 8.2.5 and 8.2.6.
- Report of the Committee on Allowances (Ashok Lavasa Committee), submitted 27 April 2017, paragraphs 3.6, 3.7, 4.7, 8.3 and 8.5, and Appendix I.
- Press Information Bureau, Cabinet Committee on Economic Affairs, “Cabinet approves recommendations of the 7th CPC on allowances,” 28 June 2017.
- Department of Expenditure Resolution No. 11-1/2016-IC, published in the Gazette of India (Extraordinary) on 6 July 2017, effective 1 July 2017.
- Department of Expenditure Office Memorandum No. 19051/1/2017-E.IV dated 2 August 2017 (Dress Allowance), paragraphs 5 and 6.
- Department of Expenditure Office Memorandum No. 3/1/2017-E.II(B) dated 19 July 2017 (Special Compensatory Allowances subsumed under Tough Location Allowance), paragraphs 8 and 9.
- Department of Expenditure Office Memorandum No. 4/1/2017-E.II(B) dated 13 July 2017 (abolition of the Special Compensatory (Hill Area) Allowance).
- Department of Expenditure Office Memorandum F. No. 19039/4/2008-E.IV dated 14 July 2017 (Cycle Maintenance Allowance).
- Department of Personnel and Training Office Memorandum No. A-27016/03/2017-Estt.(AL) dated 19 June 2018 (Overtime Allowance).
- Department of Pension and Pensioners’ Welfare Office Memorandum No. 4/34/2017-P&PW(D) dated 19 July 2017 (Fixed Medical Allowance).