If you are a government employee in India, you should be aware of the fact that you are permitted to receive two kinds of interest-free advances. This rule is stipulated under the 7th Central Pay Commission. With these different types of advances, there are different ways to use them, different amounts generated, different eligibility criteria, and differences in the number of monthly installments. If you are a government employee in India, it is worth knowing about these and what they entail.
Essentially, the two kinds of advances offered under the 7th Central Pay Commission are interest-free advances and interest-bearing advances. Let’s explore these further.
Interest-Free Advances Under the 7th Central Pay Commission
Previously, there were 12 interest-free advances that fell under the umbrella of the 7th Central Pay Commission. These included bicycle advances, festival advances, advances for warm clothing, and other advances like those for medical purposes and travel needs. Nonetheless, in 2016, many interest-free advances were eliminated according to the recommendations of the 7th Central Pay Commission. Eight advances were effectively eliminated, including festival allowance, bicycle allowance, warm clothing advance, etc. from the 7th Central Pay Commission.
The following table shows the interest-free advances that government employees are entitled to:
Advance
Amount
Eligibility
Advance given on travelling allowance for transfer, tour, or retirement
The amount of the advance is enough to cover an employee’s travelling expenses for 1 month – 6 weeks
This is offered in every situation in which a travelling allowance is offered
Leave Travel Concession (LTC) Advance
Up to 90% of the fare of travel
Every government employee
Advance given on travelling allowance for a deceased officer’s family
The amount given is limited to 3/4th of the expenses permissible
Same as that for transfer, tour, or retirement
Medical Treatment Advance
90% of the advance is for predefined major illnesses. Rs.10,000 is given for the treatment of cancer for 3 months or less. Rs.36,000 is given for TB treatment when the duration of treatment lasts for more than 3 months
The benefit is available to all employees of the Central Government except railway employees.
The amounts for the majority of the advances in the interest-free category were quite low. As the employee salary packages increased, these advances appeared to be less lucrative and not commensurate with the expenses for which they were offered. Consequently, there were certain demands to raise these kinds of advances by three times the regulated value.
In light of interest-free advances, it is worth mentioning some details about interest-bearing advances as well. Under this category of advances, those advances previously offered for the purchase of vehicles like cars, motorcycles, scooters, etc, have been abolished. Computer advance for central govt employees and HBA (house building advance) have been retained. Here are the advances offered in this category:
Advance
Amount
Eligibility
Personal Computer Purchase Advance
Rs.80,000 available initially and Rs.75,000 after thatAdvances are given based on the anticipated computer cost
Employees in the pay grade of Rs.19,530 or more are eligible for this.
House Building Advance
Basic pay for 34 monthsRs.7,50,000Cost of the houseRepaying capacity
Every permanent employee is given this benefit and all those employees who have completed 10 years of continuous service
For the computer advance for central government employees, an amendment in the advance amount has been made. As this advance stands currently, the amount of the advance is the actual price of the computer provided it costs within Rs. 50,000 or less. Such an advance can be availed up to a maximum of 5 times in the period of the employee’s service.
7th Central Pay Commission advances, both interest-free and interest-bearing advances are worth knowing about to gauge an employee’s upcoming expenses, as interest-bearing advances are offered with interest accumulated. Interest-free advances are more like perks given and are free from any interest to be paid.
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1. What are the advances that have been abolished in the category of interest-free advances?
Answer Field
In the category of interest-free advances, the following advances have been abolished:
– Advance for festivals
– Advance for bicycles
– Advance of pay in the event of a transfer of an employee
– Advance for warm clothing
– Leave salary advance
– Advance for natural calamities
– Advance for Hindi tutoring via a correspondence training course
– Advance for undertaking a lawsuit
2. What are the interest-free advances currently available through the 7th Central Pay Commission?
Answer Field
There are presently four advances offered through the 7th Central Pay Commission and these comprise the LTC or Leave Travel Concession Advance, the Advance given on travel allowance for transfer, tour, or retirement of the employee, the advance for Medical Reasons and Purposes, and the advance for the travel of a deceased employee’s family.
3. What are the interest-bearing advances offered to government employees?
Answer Field
The interest-bearing advances offered to government employees are HBA or house-building advances and advances to buy personal computers.
