The central government has cleared the 7th Pay Commission allowances recently and that will come into effect from July 1. The revised rates of the allowances will impact over 48 lakh central government employees, with the major effect being on their House Rent Allowances (HRA), which forms the major chunk of their salaries.
According to the new rule, the employees will see a hike in their House Rent Allowances in the range of 106% to 157% from their July salaries. For those in the highest level in the pay matrix, HRA has been increased from Rs 27,000 to Rs 60,000, thus resulting in a 122% hike. Moreover, HRA for these employees will be revised upwards to Rs 67,500, and Rs 75,000 when DA crosses 25% and 50%, respectively. The revision will translate into a 148% and 176% hike, respectively.
"HRA is currently paid @ 30% for X (population of 50 lakh & above), 20% for Y (5 to 50 lakh) and 10% for Z (below 5 lakh) category of cities. 7th CPC has recommended reduction in the existing rates to 24 percent for X, 16 percent for Y and 8 percent for Z category of cities," the government said in a statement.
"As the HRA at the reduced rates may not be sufficient for employees falling in lower pay bracket, it has been decided that HRA shall not be less than Rs 5,400, Rs 3,600 and Rs 1,800 for X, Y and Z category of cities respectively. This floor rate has been calculated @ 30%, 20% and 10% of the minimum pay of Rs 18,000. This will benefit more than 7.5 lakh employees belonging to Levels 1 to 3," it added.
The Union Cabinet chaired by the Prime Minister Narendra Modi had last month approved the recommendations of the 7th pay commission on allowances with some modifications.