Source | Financial Express
7th pay commission HRA: With Union Cabinet chaired by the Prime Minister Narendra Modi clearing the recommendations of 7th Pay Commission on allowances with some modifications, more than 48 lakh Central government employees are expecting HRA hike from 1st July. The employees will start getting HRA hike in the range of 106 per cent to 157 per cent effective from this month, according to a report in Zee News. In a bonanza to 48 lakh central government employees, the Union Cabinet on June 28 approved recommendations of 7th Central Pay Commission with 34 modifications which will impose an additional annual burden of Rs 30,748 crore on the national exchequer. The increased allowances, which came into effect from July 1, 2017, is based on the recommendations of the Committee on Allowances (CoA). The allowances as recommended by the 7th CPC would have cost the exchequer Rs 29,300 crore. The modified allowances approved by the Union Cabinet headed by Prime Minister Narendra Modi will increase the burden by Rs 1,448 crore to Rs 30,748 crore per annum.
Sharing details, Jaitley said the Pay Commission had recommended reduction in the HRA rates to 24 per cent for X, 16 per cent for Y and 8 per cent for Z category of cities. “As the HRA at the reduced rates may not be sufficient for employees falling in lower pay bracket, it has been decided that HRA will not be less than Rs 5400, Rs 3600 and Rs 1800 for X, Y and Z category of cities respectively. “This floor rate has been calculated at 30 per cent, 20 per cent and 10 per cent of the minimum pay of Rs 18,000. This will benefit more than 7.5 lakh 1 to 3 levels of employees,” he said.
HRA under current structure
House Rent Allowance (HRA) is currently paid at 30 per cent for X (population of 50 lakh and above), 20 per cent for Y (5-50 lakh) and 10 per cent for Z (below 5 lakh) category of cities.