In a much-needed clarification for lakhs of central government employees, the Ministry of Finance has confirmed that annual increments will only be granted after a full year of service, even if a senior employee's salary has been stepped up to match that of a junior. The statement was made in the Lok Sabha by the Minister of State for Finance, Pankaj Chaudhary, putting to rest persistent doubts surrounding the rules laid out in the 7th Central Pay Commission.
The issue was raised by MP Anand Bhadoria, who questioned whether a senior employee, whose pay was adjusted under Rule 7(10) of the Central Civil Services (Revised Pay) Rules, 2016, would be eligible for the next increment after completing six months of service or only after completing a full year. This situation typically arises when two grades are merged and a junior employee ends up drawing a higher salary than a senior. The senior’s pay is then “stepped up” to bring parity, but ambiguity remained about the timing of their next increment.
Addressing this concern, Chaudhary clarified that Rule 10 of the Revised Pay Rules is the guiding framework for determining the date of the next increment. Under this rule, increments are awarded only once a year either on January 1 or July 1 depending on the date of appointment, promotion, or financial upgradation such as under the Modified Assured Career Progression (MACP) scheme.
According to Rule 10, if a promotion or financial upgradation takes place between January 2 and July 1, the next increment will fall on January 1 of the following year. Conversely, if the change occurs between July 2 and January 1, the next increment will be on July 1. In all cases, a minimum of 12 months of qualifying service is required from the date of the last increment for the next one to be awarded. This timeline remains fixed even if the employee’s salary is stepped up to match a junior’s. Six months of service is not considered sufficient for eligibility.
This clarification comes after years of confusion among employee unions and HR departments across ministries and government offices. Without clear guidance, different interpretations led to inconsistent implementation of increment schedules. The Finance Ministry’s response now brings uniformity and clarity to the issue.
The discussion also sheds light on the mechanics of Dearness Allowance (DA), another critical salary component for central employees. DA is calculated based on the 12-month average of the All India Consumer Price Index for Industrial Workers (AICPI-IW). The current formula is:
DA percentage = {(AICPI average – 261.42) ÷ 261.42} × 100
At present, DA stands at 55 percent following a 2 percent increase for the January to June 2025 period. The AICPI data for June 2025 has already been released, and early calculations suggest that a 3 percent DA hike is likely for the July to December 2025 cycle.
Understanding the intricate rules around increments, DA, MACP, and pay structure is essential for every central government employee. With this official clarification, employees now have a clearer picture of what to expect in terms of their annual salary progression and planning.
For more updates on pay commission news, government employee benefits, and financial planning tips, follow You Finance on Instagram and Facebook. Stay informed, stay empowered.
