Grade pay
Grade pay was the fixed amount added to the pay band to give basic pay from 2006 to 2015. The 7th CPC abolished it; each level still carries its old grade pay.
Grade pay was a fixed monthly amount attached to every central civil post under the 6th Central Pay Commission, added to the pay drawn within a running pay band to give basic pay. It was notified by the Central Civil Services (Revised Pay) Rules, 2008 through gazette notification G.S.R. 622(E) dated 29 August 2008, and it applied from 1 January 2006 to 31 December 2015. It is no longer paid. The 7th Central Pay Commission abolished grade pay and the pay bands from 1 January 2016 and replaced both with the 18 levels of the pay matrix, where basic pay is a single cell and nothing is added to it.
Nineteen grade pays existed. Fifteen ran across the four pay bands, from Rs. 1,800 in Pay Band-1 to Rs. 12,000 in Pay Band-4, and four more sat in the IS scale of Rs. 4,440 to 7,440 below the first band. Each figure was computed by formula rather than by judgement: paragraph 2.2.21 of the Report of the Sixth Central Pay Commission set it at 40% of the maximum of the pre-revised 5th CPC scale, rounded up to the next multiple of Rs. 100.
The figure did far more than add to pay. It fixed a post’s place in the hierarchy, decided its classification as Group A, B, C or D under Department of Personnel and Training notification S.O. 946(E) dated 9 April 2009, set the base of the 3% annual increment, capped the Modified Assured Career Progression scheme at Rs. 12,000, and keyed several allowances to slab tables. That is why abolishing it in 2016 required every one of those references to be re-expressed in terms of pay levels.
This article sets out the definition, how basic pay was built, the full list of grade pays and how each was fixed, the Rs. 5,400 overlap that generated the most litigation, what the figure determined beyond pay, how each grade pay maps to a level of the present pay matrix, why the 7th CPC abolished it, and where the figure still has effect.
Definition
Grade pay was a fixed amount attached to a post, not to a person, and it did not change with length of service. An employee’s pay moved upward within the running pay band through annual increments, while the grade pay stayed constant until promotion or a financial upgradation moved the employee to a post carrying a higher one.
The 6th Central Pay Commission, which reported on 24 March 2008, replaced the 33 separate pay scales of the 5th Central Pay Commission with four running pay bands and attached a grade pay to each post. The band was a broad range within which pay moved. The grade pay was the marker of rank. Two posts could sit in the same band, and the one carrying the higher grade pay was the senior.
Basic pay under the 6th CPC
Basic pay from 1 January 2006 to 31 December 2015 was the sum of two figures: the pay drawn within the running pay band, and the grade pay of the post. An employee drawing Rs. 20,000 in Pay Band-2 on a grade pay of Rs. 4,200 had a basic pay of Rs. 24,200. Dearness allowance, house rent allowance and the other allowances were computed on that combined figure, never on the band pay alone.
The annual increment ran on the same base. Rule 10 of the CCS (Revised Pay) Rules, 2008 fixed it at 3% of pay in the pay band plus grade pay, rounded up to the next multiple of Rs. 10, and credited it on a uniform date of 1 July for every employee, replacing increments that had fallen on the anniversary of appointment. The increment was added to the pay in the band; the grade pay itself never moved.
This two-part structure is the defining feature of 6th CPC pay and the source of most of its difficulty. Reading an employee’s pay, and fixing it on promotion, meant handling two moving parts and comparing them across bands that overlapped.
The nineteen grade pays
Section 1 of Part A of the First Schedule to the CCS (Revised Pay) Rules, 2008 lists fifteen distinct grade pays across the four running pay bands, in sixteen placements because Rs. 5,400 appears twice, with four more in the IS scale below Pay Band-1.
| Pay band or scale | Range (Rs. per month) | Grade pays (Rs.) |
|---|---|---|
| IS scale (below Pay Band-1) | 4,440 to 7,440 | 1,300, 1,400, 1,600, 1,650 |
| Pay Band-1 | 5,200 to 20,200 | 1,800, 1,900, 2,000, 2,400, 2,800 |
| Pay Band-2 | 9,300 to 34,800 | 4,200, 4,600, 4,800, 5,400 |
| Pay Band-3 | 15,600 to 39,100 | 5,400, 6,600, 7,600 |
| Pay Band-4 | 37,400 to 67,000 | 8,700, 8,900, 10,000, 12,000 |
Above Pay Band-4 sat three scales carrying no grade pay at all: the Higher Administrative Grade of Rs. 67,000 to 79,000, the Higher Administrative Grade Plus of Rs. 75,500 to 80,000, the apex scale of Rs. 80,000 fixed and the Cabinet Secretary’s scale of Rs. 90,000 fixed. A post in any of those was ranked by its scale, not by a grade pay.
The IS scale grade pays are a special case. The scale was a holding arrangement for the erstwhile Group D grades being phased out, and no fresh recruitment was made to it. Notification S.O. 946(E) classifies those four grade pays as Group D “till the posts are upgraded”, and the upgradation duly happened: the posts were absorbed into the Multi-Tasking Staff cadre on grade pay Rs. 1,800, which is now Level 1 of the pay matrix at Rs. 18,000.
How each figure was fixed
Grade pay was computed by formula. Paragraph 2.2.21 of the Report of the Sixth Central Pay Commission set it at 40% of the maximum of the basic pay of the pre-revised 5th CPC scale of the grade, rounded up to the next multiple of Rs. 100. Where two or more pre-revised scales were merged into one, the maximum of the highest of them was taken, and the report records that some figures were adjusted afterwards to keep a clear differential between successive grades.
The formula is checkable against the old scales. The 5th CPC S-4 scale topped out at Rs. 4,400, and 40% of that is Rs. 1,760, which rounds up to Rs. 1,800. The S-7 scale topped out at Rs. 6,000, giving exactly Rs. 2,400. The S-15 scale topped out at Rs. 13,500, giving exactly Rs. 5,400. The S-21 scale topped out at Rs. 16,500, giving exactly Rs. 6,600.
This is the reason the 5th CPC S-1 to S-34 numbering did not vanish in 2006. It is embedded in the grade pay values themselves, and it still surfaces in the concordance tables used to revise the pension of anyone who retired on those scales.
The Rs. 5,400 overlap
A grade pay of Rs. 5,400 existed in Pay Band-2 (Rs. 9,300 to 34,800) and again in Pay Band-3 (Rs. 15,600 to 39,100), and that single duplication produced the most disputed feature of the whole structure. Two employees carrying the identical grade pay of Rs. 5,400 could sit in different bands drawing materially different pay, because the band floor differed by Rs. 6,300 a month.
Promotion across the two was the sharper problem. Moving from Pay Band-2 to Pay Band-3 raised the band without raising the grade pay, so the ordinary promotion rule of moving to the next higher grade pay gave no guidance, and the resulting fixation had to be argued case by case. The non-functional upgradation that lifts a Section Officer to grade pay Rs. 5,400 runs through the same pair of placements.
The 7th Central Pay Commission resolved it structurally by giving each placement its own level. Grade pay Rs. 5,400 in Pay Band-2 became Level 9, entry pay Rs. 53,100. Grade pay Rs. 5,400 in Pay Band-3 became Level 10, entry pay Rs. 56,100. The two are now different levels with different entry cells and different index of rationalisation factors, 2.62 and 2.67, so the ambiguity cannot recur.
Classification of posts by grade pay
From 9 April 2009 to 8 August 2018, the group of a central civil post was decided by its grade pay. Department of Personnel and Training notification S.O. 946(E) dated 9 April 2009, issued under the proviso to Article 309 and clause (5) of Article 148 of the Constitution read with Rule 6 of the CCS (Classification, Control and Appeal) Rules, 1965, superseded notification S.O. 332(E) dated 20 April 1998 and classified every post as follows.
| Group | Posts covered |
|---|---|
| Group A | Cabinet Secretary’s scale, apex scale and Higher Administrative Grade Plus; grade pay Rs. 8,700, 8,900, 10,000 and 12,000 in Pay Band-4; grade pay Rs. 5,400, 6,600 and 7,600 in Pay Band-3 |
| Group B | Grade pay Rs. 4,200, 4,600, 4,800 and 5,400 in Pay Band-2 |
| Group C | Grade pay Rs. 1,800, 1,900, 2,000, 2,400 and 2,800 in Pay Band-1 |
| Group D | Grade pay Rs. 1,300, 1,400, 1,600 and 1,650 in the IS scale, until the posts were upgraded |
Notification S.O. 3964(E) dated 9 August 2018, which supersedes S.O. 3570(E) dated 9 November 2017, replaced this with a classification by pay level: Group A at Levels 10 to 18, Group B at Levels 6 to 9, and Group C at Levels 1 to 5. Group D no longer exists. The two orders produce the same result for almost every post, because the level a grade pay maps to preserves the old boundaries, with the Pay Band-3 and Pay Band-2 placements of grade pay Rs. 5,400 falling either side of the Group A line at Levels 10 and 9 respectively.
Entitlements keyed to the figure
Grade pay was the single number that placed an employee in the hierarchy for pay, status and entitlements at once.
The Modified Assured Career Progression scheme was built on it. Department of Personnel and Training Office Memorandum No. 35034/3/2008-Estt.(D) dated 19 May 2009 granted three financial upgradations on completion of 10, 20 and 30 years of regular service, each to the immediate next grade pay in the hierarchy of Section 1, Part A of the First Schedule to the CCS (Revised Pay) Rules, 2008, and capped the benefit at the highest grade pay of Rs. 12,000 in Pay Band-4. Because the scheme moved an employee up the grade pay ladder rather than to the grade pay of a promotion post, it decoupled the financial benefit from the cadre hierarchy for the first time. The consolidated scheme now runs on pay levels, under Office Memorandum No. 35034/3/2015-Estt.(D) dated 22 October 2019.
Individual allowances were keyed to grade pay slabs. Office Memorandum No. 7(20)/2008-E.III(A) dated 24 September 2008 converted the family planning incentive into a fixed monthly family planning allowance with a slab table indexed on the grade pay of the post. The Central Government Employees Group Insurance Scheme subscription follows the group, and the group followed the grade pay under S.O. 946(E), so the insurance rate was set by grade pay at one remove.
Seniority within a cadre was expressed through grade pay as well. In a structure where a band was shared by several grades, the grade pay was the only figure that distinguished rank, which is why it appears in recruitment rules, seniority lists and promotion orders of the period rather than the band.
Mapping to the pay matrix levels
Every grade pay in the four running pay bands corresponds to exactly one level of the present pay matrix. The 7th Central Pay Commission built each level’s first cell by taking the 6th CPC entry pay of that grade, meaning the minimum of the pay band plus the grade pay for a direct recruit, multiplying by the index of rationalisation assigned to the level, and rounding to the nearest hundred rupees.
| Former grade pay (Rs.) | Pay band | Level | Index | Entry pay in matrix (Rs.) |
|---|---|---|---|---|
| 1,800 | PB-1 | 1 | 2.57 | 18,000 |
| 1,900 | PB-1 | 2 | 2.57 | 19,900 |
| 2,000 | PB-1 | 3 | 2.57 | 21,700 |
| 2,400 | PB-1 | 4 | 2.57 | 25,500 |
| 2,800 | PB-1 | 5 | 2.57 | 29,200 |
| 4,200 | PB-2 | 6 | 2.62 | 35,400 |
| 4,600 | PB-2 | 7 | 2.62 | 44,900 |
| 4,800 | PB-2 | 8 | 2.62 | 47,600 |
| 5,400 | PB-2 | 9 | 2.62 | 53,100 |
| 5,400 | PB-3 | 10 | 2.67 | 56,100 |
| 6,600 | PB-3 | 11 | 2.67 | 67,700 |
| 7,600 | PB-3 | 12 | 2.67 | 78,800 |
| 8,700 | PB-4 | 13 | 2.67 | 1,23,100 |
| 8,900 | PB-4 | 13A | 2.67 | 1,31,100 |
| 10,000 | PB-4 | 14 | 2.72 | 1,44,200 |
The Level 13 entry pay was corrected after notification. The CCS (Revised Pay) (Amendment) Rules, 2017, notified as G.S.R. 592(E) on 15 June 2017, raised the Level 13 index from 2.57 to 2.67 and moved the entry pay from Rs. 1,18,500 to Rs. 1,23,100. Conversion tables still showing Rs. 1,18,500 against grade pay Rs. 8,700 predate that correction and are wrong.
Grade pay Rs. 12,000 has no counterpart row. It was the ceiling of the Modified Assured Career Progression scheme and appears in the Group A entry of S.O. 946(E), but the concordance series issued on 6 July 2017 runs from grade pay Rs. 10,000 at Tables 50 to 52 straight to the Higher Administrative Grade at Table 53, and the levels above 14 are keyed to the Higher Administrative Grade, Higher Administrative Grade Plus, apex and Cabinet Secretary scales rather than to a grade pay.
Individual pay fixation on 1 January 2016
An employee’s own pay was converted by the fitment factor, not by the index of rationalisation. Rule 7(1)(A)(i) of the CCS (Revised Pay) Rules, 2016 takes existing basic pay, meaning pay in the pay band plus grade pay as on 31 December 2015, multiplies it by 2.57, rounds to the nearest rupee, and places the result in the level corresponding to the grade pay. A cell equal to that figure is taken; where none exists, pay is fixed at the immediate next higher cell. Rule 7(1)(A)(ii) provides that where the product falls below the first cell of the level, pay is fixed at that first cell.
The two multipliers are routinely confused and they do different jobs. The 2.57 fitment factor applies to a person, once, at conversion. The index of rationalisation applied to a level, once, when the matrix was drawn, and no employee was ever multiplied by 2.62 or 2.72. They coincide at 2.57 only for Levels 1 to 5.
Why the 7th CPC abolished it
The running pay band and grade pay design blurred the hierarchy it was meant to express. A band was a wide continuous range shared by several grades, so pay drawn in one grade overlapped the pay drawn in the grade above it, and a senior employee near the top of a band could out-earn a junior colleague just promoted into the next grade. The differential between adjacent grades compressed as pay rose within the band.
The 7th Central Pay Commission replaced both components with a single matrix of 18 levels, each with a fixed non-overlapping entry pay and a column of cells rising at 3% a year. Chapter 5.1 of its report sets out the reasoning: a defined vertical progression, with the gap between levels deliberately widened at the higher pay bands through a rising index of rationalisation, on the ground that role, responsibility and accountability increase at each step.
The design was contested. The Staff Side of the Joint Consultative Machinery argued before the National Anomaly Committee that a varying multiplication factor disturbs vertical relativity, since no new responsibilities were added to any grade between 2006 and 2016, and proposed applying the top factor of 2.81 uniformly to every level, which would have lifted minimum pay to about Rs. 19,670. The Government did not accept that proposal, and the graded index remains in force.
Effect on pension for pre-2016 retirees
Grade pay still decides the pension of anyone who retired on or before 31 December 2015. Department of Pension and Pensioners’ Welfare Office Memorandum F. No. 38/37/2016-P&PW(A) dated 12 May 2017 set the notional-pay method for revising pre-2016 pensions, and the Office Memorandum of even number dated 6 July 2017 issued the 58 concordance tables that implement it.
Each concordance table is keyed to one grade pay or pre-revised scale. Tables 1 to 4 cover the four IS-scale grade pays of Rs. 1,300, 1,400, 1,600 and 1,650, Tables 5 to 8 cover posts upgraded to grade pay Rs. 1,800 during the 6th CPC period, Tables 20 to 25 cover grade pay Rs. 4,200, Tables 50 to 52 cover grade pay Rs. 10,000, and Table 53 covers the Higher Administrative Grade. A row carries the pay stage drawn at retirement across to a notional pay as on 1 January 2016 in the corresponding pay-matrix level. Revised pension is 50% of that notional pay and revised family pension 30%, each rounded up to the next rupee, and the result is compared with the pension already revised by the 2.57 multiple, with the higher of the two granted.
The practical consequence is that a pensioner cannot begin a revision claim without the grade pay held at retirement, because that figure is what selects the table.
Status today
Grade pay is not a component of central government pay and has not been since 31 December 2015. Basic pay is one cell of the pay matrix, and nothing is added to it. An employee recruited after 1 January 2016 has a level and has never held a grade pay in the paying sense.
The words persist as a label, because the levels correspond one to one with the old grade pays. A post is still routinely described as “Level 6, grade pay Rs. 4,200” in recruitment notices, cadre documents and service records, and the salary at each pay level is indexed on the level rather than the former grade pay. Used that way the term names a level; it does not name money that is paid.
The abolition binds central civil posts only, through the CCS (Revised Pay) Rules, 2016. State governments, autonomous bodies and public sector undertakings notify their own pay structures, so a body that has not adopted the 7th CPC pay matrix continues on whatever structure it last notified, which for several is still a pay band with a grade pay attached. A grade pay quoted in a state government or autonomous body advertisement is therefore a live figure in that organisation even though it is historical in the Central Government.
Finding the grade pay on record
The grade pay held before 2016 is recorded in three places. Any pay slip for a month between January 2006 and December 2015 shows basic pay as two figures, the pay in the pay band and the grade pay. The service book carries the pay-fixation entry made under the CCS (Revised Pay) Rules, 2008, which states the band, the stage and the grade pay. For a pensioner, the Pension Payment Order records the pay drawn at retirement in the same two-part form.
The figure is worth retrieving rather than estimating. It selects the concordance table under the 6 July 2017 order, and a revision computed from the wrong table gives the wrong notional pay and the wrong pension.
Frequently Asked Questions (FAQs)
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What were all the grade pays?
How was the amount of a grade pay decided?
What was the grade pay Rs. 5,400 anomaly?
Which pay-matrix level corresponds to grade pay Rs. 4,200?
Did grade pay decide whether a post was Group A, B or C?
Is grade pay still paid to central government employees?
How did grade pay affect the annual increment and MACP?
Does grade pay still matter for pension?
Do state governments and public sector undertakings still use grade pay?
How can an employee find the grade pay held before 2016?
Related Articles
- Pay band
- Pay matrix
- Index of rationalisation
- 6th Central Pay Commission
- 7th Central Pay Commission
- 5th Central Pay Commission
- 8th Central Pay Commission
- Central Pay Commission
- Fitment factor
- Minimum pay
- Pay fixation
- Annual increment
- Concordance table
- Modified Assured Career Progression
- Non-functional upgradation
- CCS (Revised Pay) Rules, 2016
- CCS (Classification, Control and Appeal) Rules, 1965
- Central government employees in India
- Central government jobs
- Gazetted and non-gazetted
- Family planning allowance
- Central Government Employees Group Insurance Scheme
- Dearness allowance
- House rent allowance
- Family pension
- Salary by pay level
- Take-home salary of central government employees
- Department of Expenditure
- Department of Personnel and Training
- 7th CPC salary calculator
External references
- Department of Expenditure, Ministry of Finance
- 6th Central Pay Commission report (doe.gov.in)
- 7th Central Pay Commission report (doe.gov.in)
- Department of Personnel and Training
- Department of Pension and Pensioners’ Welfare
- Pensioners’ Portal
References
- Report of the Sixth Central Pay Commission (submitted 24 March 2008), paragraph 2.2.21 and Table 2.2.2, fixing grade pay at 40% of the maximum of the pre-revised 5th CPC scale rounded up to the next multiple of Rs. 100.
- Central Civil Services (Revised Pay) Rules, 2008 (gazette notification G.S.R. 622(E), dated 29 August 2008), Section 1 of Part A of the First Schedule, prescribing the running pay bands and the grade pay attached to each post, and Rule 10 on the annual increment of 3% of pay in the pay band plus grade pay.
- Department of Personnel and Training notification S.O. 946(E), dated 9 April 2009, classifying central civil posts as Group A, B, C and D on the basis of grade pay under Rule 6 of the Central Civil Services (Classification, Control and Appeal) Rules, 1965, in supersession of S.O. 332(E) dated 20 April 1998.
- Department of Personnel and Training notification S.O. 3964(E), dated 9 August 2018, reclassifying central civil posts by pay level, in supersession of S.O. 3570(E) dated 9 November 2017.
- Department of Personnel and Training, Office Memorandum No. 35034/3/2008-Estt.(D), dated 19 May 2009, on the Modified Assured Career Progression scheme, capping upgradations at grade pay Rs. 12,000 in Pay Band-4; consolidated by Office Memorandum No. 35034/3/2015-Estt.(D), dated 22 October 2019.
- Report of the Seventh Central Pay Commission (submitted 19 November 2015), Chapter 5.1, paragraph 5.1.19 onward, on the abolition of grade pay and the index of rationalisation used to build the pay matrix.
- Central Civil Services (Revised Pay) Rules, 2016 (gazette notification G.S.R. 721(E), dated 25 July 2016), Rule 7, on fixation of pay in the pay matrix from pay in the pay band plus grade pay.
- Central Civil Services (Revised Pay) (Amendment) Rules, 2017 (gazette notification G.S.R. 592(E), dated 15 June 2017), raising the Level 13 index of rationalisation from 2.57 to 2.67 and the entry pay from Rs. 1,18,500 to Rs. 1,23,100.
- Department of Pension and Pensioners’ Welfare, Office Memorandum F. No. 38/37/2016-P&PW(A), dated 12 May 2017, on revision of pre-2016 pensions by the notional-pay method, and the Office Memorandum of even number dated 6 July 2017 issuing the 58 concordance tables keyed to grade pay.
- Department of Expenditure, Office Memorandum No. 7(20)/2008-E.III(A), dated 24 September 2008, introducing the family planning allowance on a slab table keyed to grade pay.