Additional Chief Secretary (Home) Avanish Awasthi told reporters that while Rs 40 lakh would be given to the Army officer's wife, Rs 10 lakh would be given to his mother.
Col Sharma belongs to Syana in Bulandshahr though his family now lives in Jaipur in Rajasthan.
The Chief Minister also announced a government job for one member of the bereaved family. He said that a 'Gaurav Dwar' would be constructed in the village of the Army officer.
The Colonel, who was commanding a Rashtriya Rifles battalion in the Rajwar area of Handwara tehsil, apart from a Major, a Lance Naik, a rifleman and a police official, made the supreme sacrifice in the 20-hour-long gunfight with holed-up terrorists in the Chanjimulla village of Handwara tehsil on Saturday night.