How the 7th Pay Commission salary structure works
The 7th Central Pay Commission, implemented from 1 January 2016, replaced the old pay band and grade pay system with a single pay matrix of 18 levels and 40 cells each. Your position in that grid is your basic pay, and every allowance you draw is a percentage of that one number, which is why getting the matrix cell right matters more than anything else in the calculation.
Step 1 — Fix the basic pay
Pay on 31 December 2015 (pay in the pay band plus grade pay) was multiplied by 2.57 and placed at the nearest equal or higher cell of the corresponding level. Since then each 1 July adds one increment, about 3% of basic pay rounded up to the next ₹100, so a Level 7 official who started at ₹44,900 now sits several cells lower in the same column.
Step 2 — Add dearness allowance
DA neutralises inflation and is paid as a flat percentage of basic pay, revised from January and July each year on the AICPI-IW twelve-month average. At the current 60% rate, DA is the single largest component of a central government pay slip after basic pay.
Step 3 — Add HRA and transport allowance
HRA is 30% of basic pay in X class cities, 20% in Y and 10% in Z, with floor amounts of ₹5,400, ₹3,600 and ₹1,800. Transport allowance is a flat slab of ₹900, ₹1,350, ₹3,600 or ₹7,200 by level and posting, and DA is payable on TA as well.
Step 4 — Deduct to reach in-hand pay
From gross salary, subtract NPS at 10% of basic plus DA (or GPF if you are a pre-2004 entrant), CGEGIS at ₹30 to ₹120 by level, the CGHS contribution for your slab, professional tax where a state levies it, and income tax after choosing the regime that suits you.