7th Pay Commission has introduced a separate Pay Matrix Table for Defence Forces Personnel. The commission has explained in its report that the unique table structure has been simplified so that each employee can find his or her place in the proposed Matrix.
Read more: Pay Structure of the Defence Forces Personnel and Military Nursing Service (MNS) Officers
All the employees belonging to various services will proceed according to their respective service conditions by earning increment on the basis of merit. The Pay Matrix designed for the defence forces personnel is more compact than the civil pay matrix keeping in view the number of levels, age and retirement profile of the service personnel.
The entry pay for various ranks of defence forces personnel, other than MNS Offices, has been arrived at on the same premise, as has been done in the case of civilian. As an illustration, entry pay for a Captain has been arrived at as follows: Entry pay in existing pay band + (Residency Period for promotion to Captain from Lieutenant x annual increment) + grade pay of the rank of Captain = ₹15,600 + (2 x ₹630) + ₹6,100 = ₹22,960. The starting point of a Sepoy (and equivalent), the entry level personnel in the defence forces, has been fixed in the Defence Pay Matrix at ₹21,700. The starting point in the existing pay structure is ₹8,460 for a Sepoy/equivalent.
The fitment in the new matrix is essentially a multiple factor of 2.57. This multiple is the ratio of the new minimum pay arrived at by the Commission (₹18,000) and the existing minimum pay (₹7,000). The fitment factor is being applied uniformly to all employees. It includes a factor of 2.25 to account for DA neutralisation, assuming that the rate of Dearness Allowance would be 125 percent at the time of implementation of the new pay as on 01.01.2016.
The actual raise/fitment being recommended by the Commission is 14.29 percent. An identical fitment of 2.57 has also been applied to the existing rates of Military Service Pay (MSP), applicable to defence forces personnel only.
Source:- indianmilitary veterans