Major news for central government employees. Since the cabinet announced the establishment of the 8th Pay Commission in January, there’s been a lot of excitement and speculation about potential changes to salaries, allowances, and HRA.
So, how much will the HRA increase or change under the 8th Pay Commission? That largely hinges on the formation of the pay panel, which will be led by a chairman. In the meantime, looking back at the HRA recommendations from the 7th Pay Commission can provide some insight into what to expect from the upcoming commission.
In 2017, a high-level committee led by Finance Secretary Ashok Lavasa submitted a report to then Finance Minister Arun Jaitley regarding HRA for central government employees. This committee supported the 7th Pay Commission’s recommendations, which suggested a reduction in house rent allowance (HRA) by 2-6 percent based on the type of city.
Here’s a breakdown of the HRA recommendations for Class X, Y, and Z cities:
– For cities with a population over 50 lakh (Class X): Current HRA is 30%; Proposed HRA is 24%. If DA exceeds 50%, it becomes 27%; if it exceeds 100%, it goes up to 30%.
– For cities with a population between 5 lakh and 50 lakh (Class Y): Current HRA is 20%; Proposed HRA is 16%. If DA exceeds 50%, it becomes 18%; if it exceeds 100%, it goes up to 20%.
– For cities with a population below 5 lakh (Class Z): Current HRA is 10%; Proposed HRA is 8%. If DA exceeds 50%, it becomes 9%; if it exceeds 100%, it goes up to 10%.
The 7th Pay Commission, led by AK Mathur, initially set the HRA rates at 24%, 16%, and 8% of Basic Pay for Class X, Y, and Z cities, respectively. They also recommended that these rates would increase to 27%, 18%, and 9% when DA surpasses 50%, and further to 30%, 20%, and 10% when DA exceeds 100%. Previously, the HRA rates for Class X, Y, and Z cities were 30%, 20%, and 10% of Basic Pay (which includes pay in the pay band plus grade pay).