7th Pay Commission on allowances: Maximum monthly HRA hiked by 176% to Rs 75,000

Lower level employees will get HRA hike of up to 157 percent from their July month salaries as against 122 percent for higher level employees. But when DA will cross 50% then higher level employees will receive 176 percent hike as against 157 percent hike for lower level employees.

New Delhi: More than 7.5 lakh central government employees belonging to Levels 1 to 3 in the pay matrix will get minimum HRA (House Rent Allowance) of Rs 5,400, Rs 3,600 and Rs 1,800 for X, Y and Z category of cities respectively.

However, over the short term, lower level employees will be benefitted but in the long run they will be the net losers. For instance,  lower level employees will get HRA hike of up to 157 percent from their July month salaries as against 122 percent for higher level employees. But when DA will cross 50% then the higher level employees will receive 176 percent hike as against 157 percent increase for lower level employees.

"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," the government said in a statement.

The table below elaborates how more than 7.5 lakh employees belonging to Levels 1 to 3 in the pay matrix will be benefitted owing to fixation of minimum HRA.

Pay Matrix		X (Minimum Rs 5,400)	Y (Minimum Rs 3,600)	Z (Minimum Rs 1,800)
Level 1- 18,000		Rs 4320 (+1,080)	Rs 2880 (+ 720)	Rs 1440 (+360)
Level 2- 19,900		Rs 4776 (+624)	Rs 3184  (+416)	Rs 1592  (+208)
Level 3- 21,700		Rs 5208 (+192)	Rs 3472 (+128)	Rs 1736  (+64)

More than 48 lakh central government employees will start getting HRA (House Rent Allowance) hike in range of 106 percent to 157 percent from this month (July, 2017) salaries as the Union Cabinet chaired by the Prime Minister Narendra Modi last month approved the recommendations of the 7th CPC on allowances with some modifications.

While approving the recommendations of the 7th CPC on 29th June, 2016, the Cabinet had decided to set up the Committee on Allowances (CoA) in view of substantial changes in the existing provisions and a number of representations received.

The modifications are based on suggestions made by the CoA in its Report submitted to Finance Minister on 27th April, 2017 and the Empowered Committee of Secretaries set up to screen the recommendations of 7th CPC.

"7th CPC had also recommended that HRA rates will be revised upwards in two phases to 27%, 18% and 9% when DA crosses 50% and to 30%, 20% and 10% when DA crosses 100%. Keeping in view the current inflation trends, the Government has decided that these rates will be revised upwards when DA crosses 25% and 50% respectively. This will benefit all employees who do not reside in government accommodation and get HRA," as per govt statement.

As per recommendation of AK Mathur Panel

Population of City			DA above
	Present	Proposed	50%	100%
Above 50 lakh (Class X)	30%	24%	27%	30%
5 lakh to 50 lakh (Class Y)	20%	16%	18%	20%
Below 5 lakh (Class Z)	10%	8%	9%	10%

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 had recommended reduction in the existing rates to 24 percent for X, 16 percent for Y and 8 percent for Z category of cities.

As per modification in AK Mathur recommendation, cleared by Union Cabinet

Population of City			DA above
	Present	Proposed	25%	50%
Above 50 lakh (Class X)	30%	24%	27%	30%
5 lakh to 50 lakh (Class Y)	20%	16%	18%	20%
Below 5 lakh (Class Z)	10%	8%	9%	10%

As far as other allowances are concerned, the Union Cabinet has decided not to abolish 12 of the 53 allowances which were recommended to be abolished by the 7th CPC.