8th Pay Commission: Major demand for tax exemption; central employees stand to gain further benefit

8th Pay Commission: The Staff Side of the National Council-Joint Consultative Machinery (NC-JCM) has placed a new demand before the 8th Pay Commission regarding central government employees. This move aims to significantly reduce their tax burden.

8th Pay Commission: Central government employees are eagerly awaiting the implementation of the 8th Pay Commission. The Commission is currently in 'action mode' regarding this matter; meetings are being held with employee unions across various states to gather suggestions and carefully consider their demands. Amidst this, the Staff Side of the NC-JCM has proposed a complete exemption for central employees from the 'Professional Tax' levied by state governments.

What is Professional Tax?

Under Article 276 of the Indian Constitution, all state governments have the authority to levy and collect Professional Tax. It is deducted based on varying tax slabs within the state; however, the maximum annual limit is capped at ₹2,500. Central employees who have opted for the 'Old Tax Regime' are eligible for a deduction on the Professional Tax deducted from their salaries under Section 16(3) of the Income Tax Act. In contrast, no such deduction is available under the 'New Tax Regime'.

What is the demand of the employee unions?