Allowances allow tax saving but some may be obsolete and outdated

By Shantanu Nandan Sharma and Anirban Bora

Sounds odd, but Central Industrial Security Force (CISF) personnel receive a haircutting allowance at the rate of Rs 5 per month, the lowest among 196 government allowances that prevail today. This allowance should have been discarded long ago, as haircutting is very much a part of the CISF cadres’ composite personal maintenance allowance. But no one probably had spotted this till the 7th Central Pay Commission found it “outdated” and recommended its abolition.

The list of outdated government perks is pretty long. Sample this: select postal department employees are entitled to a Rs 90-per month cycle allowance, if the employee fulfills a number of conditions including the submission of proof that there has been an “extensive use” of the bicycle. Indian Foreign Service officers are given a monetary incentive that’s ridiculously low for learning an optional foreign language — Rs 100 per month if the officer turns “proficient” in that language and Rs 200 per month if the officer becomes “above proficient”!

So, when the 7th Central Pay Commission chairman Justice AK Mathur along with two members of the Commission had to evaluate the demands of IAS, IFS, IPS, Central government services and defence personnel in several rounds of meetings spanning nearly two years, they encountered a humongous task of rationalising as many as 196 allowances in addition to weighing in on the core issues of pay hike and pay parity. The list of allowances includes the well-known ones like DA (dearness allowance) and HRA (house rent allowance). But there exist perks such as shoe allowance, spectacle allowance, boiler watch keeping allowance and secret allowance, many of which are not known at all to the people working outside the government.

And the Central Pay Commission, which submitted its report 10 days ago to the finance ministry, clearly recommended abolition of 52 allowances that they found obsolete. ET Magazine picks out 10 of the more quirky allowances where the Commission articulated a clear view before recommending their abolition or retention: