New Year greetings are extended to the central and state government employees. In 2025, the new pay structure set by the Pay Commission will be in effect, which means a pay rise for thousands of employees in the government and private sectors across the country. The salary hike will be determined on the basis of inflation rates (DA/DR), Pay Commission recommendations, and companies’ profits. Here is a look at how much your salary will increase in 2025 and what the new rules are.
Government Employees Will Get Salary Hike
Preparations have commenced at the central government level to implement the recommendations of the 7th Pay Commission, under which pay for government employees will likely be increased in 2025 by anywhere from 4% to 8%. Besides, dearness allowance (DA) may also go up to 60%, which will substantially increase the gross pay of the employees. The state governments can also be expected to pass similar orders shortly.
What Is The Plan For Private Sector employees?
Salary increments for the private sector are anticipated in 2025 as well. Large corporations have indicated increments for their employees between 7% and 12%. Such increments, however, may be higher in the likes of IT, banking, and manufacturing. Employee performance and the company’s profitability will determine the increments offered.
Dearness Allowance (DA / DR) Will Increase
Increased salaries, allowances, as well as dearness allowance, will also become effective back from January 2023 with a hike of 4%. General dearness allowance will now become 60%, approved directly in favor of the general government employees and pensioners. From this point on, the state governments could follow suit very soon concerning theirs.
What Will Be The Impact On The Minimum Wage?
The policy for central minimum wages for consideration is again likely to be raised to higher pay scales from 2025. The minimum wage for workers in the unorganized sector may increase from Rs 350 to Rs 400 per day. Revision of minimum wage rates will also be done by state governments.
How Will Your Salary Hike Be Decided?
Enhancement or salary hike depends on a number of parameters that include company performance, work experience of the employee, and role of the employee. Salary hikes in the public sector will depend on what the Pay Commission says and on DA and DR. In the private sector salary will be increased depending on the budget and employees’ performances.
Tax Relief For Employees
Apart from the annual pay increase, the government has also provided tax relief to the employees. The introduction of new tax slabs provides for no taxes for annual income up to Rs 7 Lakhs, thereby reducing the tax burden for employees. Beyond that, HRA, along with medical allowance, will also be waived.
Also Read: Income Tax Rules 2025: Major Updates That Will Impact Your Finances