Everything about the 7th Pay Commission House Rent Allowance

Employees of the Central Government are eligible for house rent allowance in accordance with the city in which they reside. The cities are segregated under three categories, i.e. X, Y, and Z, and this also applies to the towns where the employees reside. Employees receive house rent allowance as a percentage of their basic salaries, varying across the said classified cities. The HRA in the 7^th pay commission constitutes a major portion of the various allowances that are bundled with the salaries of these employees. This allowance is also subject to revisions if the Dearness Allowance (DA) gets revised by the government. As per the rules laid down, the monthly HRA is a percentage of the basic salary drawn by these employees and amounts to 24% in X category of cities. It is 16% for those residing in the Y category of cities and 8% for employees residing in the Z category of cities. When you translate these percentages into cash amounts, it is equivalent to ₹5,400, ₹3,600, and ₹1,800 in the said classified cities. However, if the dearness allowance exceeds 25%, the said HRA percentage also increases to 27%, 18%, and 9% in the classified order of the cities.

Did you know? The central government employees at the highest rung of the hierarchy ladder receive an HRA of ₹60,000 every month!

HRA for Central Government Employees

House Rent Allowance (HRA)

In 2020, the total number of employees in the central government of India was 3.18 million. There are about 196 different allowances which are given to these employees as per their hierarchy and experience. House rent allowance forms a key part of the allowances enjoyed by central government employees. The house rent allowance of central government employees gets positively impacted when the dearness allowance is increased.  The dearness allowance is known to ease the impact of inflation, especially the employees living on pensions. The DA is increased two times in a year. The previous increase in the dearness allowance came into effect in March 2022. The next increase is scheduled for August and will likely increase by about 4%. The X, Y, and Z classification of cities is also referred to as Tier 1, Tier 2, and Tier 3 cities. India includes eight X cities and ninety-seven Y cities, with the remaining qualifying as Z cities which are known to have a population of 5 lakhs. Let us understand how house rent allowance is calculated for central employees.

Keeping in mind the rate of percentage increase of  27%, 18%, and 9% across the classified cities, let us assume an employee’s basic salary amounts to ₹50,000.

1. With a 27% increase, the HRA is calculated as (50000×27/100) = ₹13,500.
2. An 18% increase in the HRA is calculated as (50,000×18/100) = ₹9,000.
3. A 9% increase in the HRA is calculated as (50,000×9/100) = ₹4,500.

It is now easier to calculate the house rent allowance (HRA) online with the new HRA calculator.

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Siachen Allowance

The Risk & Hardship allowance matrix table is applicable to all those serving in Defence. These personnel face the risks of being attacked or captured by terrorists and even losing their lives. They work under extreme conditions of weather to protect the Nation from various types of threats to its security. The Siachen glacier is situated near the India-Pakistan border. It forms one of the longest glacier mountains and stretches across a distance of 45 miles. The defence personnel have to work at minimum temperatures of minus 57 degrees Celsius or even below that at altitudes of 20,000 feet. The 7^th Pay commission revised the compensation for these brave hearts on the basis of two distinct slabs as follows:

The above revision almost doubled the compensation package and served as a welcome relief for these individuals who serve the nation under very hazardous conditions.

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Tough Location Allowance

Some of the central government’s allowances apply to geographical territories like remote localities. These include special compensatory allowance, tribal area allowance as well as Sunderbans allowance. These three allowances are now incorporated in the tough location allowance. Tough location allowance, as the term suggests, refers to allowances which are made to defence personnel who serve in difficult terrain and under extreme climatic conditions. This also includes working in the most remote and tribal regions of the country in unhygienic conditions. The territorial regions under tough location allowance come under three different categories. The rates of the Risk & Hardship matrix apply to these three categories. They range between a monthly compensation of ₹1,000 and ₹5,300. The 7^th Pay Commission had stated in the past that as defence personnel serving in regions like Ladakh, the Islands, as well as in the north-east part of the countries are already entitled to special duty allowance, the tough location allowance would not apply to them. However, the central government affirmed that the said person would be given the liberty to opt for the special compensatory allowance (remote locality) at the earlier compensation figures and the special duty allowance at the revised income figures.

National Council JCM Staff Side Recommendation on HRA

The prevailing HRA matrix for central government employees was established on the basis of various recommendations of the 6^th central pay commission. Some of the details include:

• The central government does face a dearth of adequate government housing for its large number of employees. Given below are the recommendations made by the National Council JCM staff with regards to the house rent allowance for central government employees:
• Housing accommodation arranged for employees of the central government should be taken on the basis of a long lease. Employees should pay 10% of their salary towards the same
• The central government should define the rental amounts in the classified cities in accordance with the current rentals being paid and not on the premise of the city’s population.
• Rental amounts for distinct grades of officers or specific salaried groups in certain cities should be established only after getting an insight into the prevailing conditions of those cities.
• The HRA rates laid down by the sixth (6^th) central pay commission were not considered feasible by many. Government employees find themselves at a loss when it comes to renting houses in X category of cities as the rentals are very steep. This applies to other cities as well.

Recent Updates on HRA

HRA are given at a rate of 27%, 18%, or 9% depending on the city of the employees. From July 1, 2021, this rise, along with DA, will be in effect. However, the government stated in a memorandum issued in 2015 that the HRA will be amended when DA increased from time to time. The HRA will increase by 3% in the next review of the house rent allowance. The HRA will be hiked to 30% from the current rate of 27%. However, this will only happen if the increase in the dearness allowance reaches 50%. According to a document from the Department of Transportation, if the DA reaches 50%, the HRA will be 30%, 20%, and 10%, respectively.

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Conclusion:

The contents of this article give you an insight into the various slabs of house rent allowances for central government employees. The various house rent allowance slabs of the central government employees vary across the cities they reside in. The cities are also classified into three different categories. With rising inflation and steep housing rentals, central government employees find it difficult to pay a certain percentage of their salaries towards rent. Though the allowances are eligible to appear fancy, they do not suffice to make both ends meet. Keeping in mind the various economic fluctuations and inflationary conditions, the central government is considering bringing about a revision in the current HRA allowance package for its employees. When the government increases the dearness allowance of these employees, it very naturally results in an increase in their house rent allowance as per the rules and regulations of the government. You also get an idea of the revision of allowances which have been made to defence personnel serving in perilous geographical territories like the Siachen glacier. 

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